Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

PRIVATE BUSINESS

SHREWSBURY AND ATCHAM BOROUGH COUNCIL BILL [Lords]

Read the Third time, and passed, without amendment.

Oral Answers to Questions — FOREIGN AND COMMONWEALTH AFFAIRS

The Secretary of State was asked—

East Timor

Ann Clwyd: If he will make a statement on the recent EU troika mission to East Timor. [48701]

The Secretary of State for Foreign and Commonwealth Affairs (Mr. Robin Cook): At the initiative of the British presidency, EU troika ambassadors in Jakarta visited East Timor from 27 to 30 June. The purpose of the visit was to mark the EU's continuing concern about the situation in the territory, to improve our knowledge of the situation there and to support the UN search for a fair, comprehensive and internationally acceptable solution to the problem. Their report was considered yesterday at the meeting of the General Affairs Council, which welcomed their initiative and their report. I record the appreciation of the House for the courage and determination of our ambassador and his colleagues in carrying out the visit in difficult and sometimes dangerous circumstances.

Ann Clwyd: I welcome the troika's visit and look forward to reading its report. Has any pressure been put on the Indonesian Government to have a referendum in East Timor, as required by UN decolonisation rules, so that the people of East Timor can decide for themselves the kind of future that they want? Before we give any more financial assistance to Indonesia, should not one of the conditions be progress towards that referendum? It is worth pointing out to the Indonesian Government that their presence in East Timor costs $1 million a day, a sum which they can hardly afford in the circumstances.

Mr. Cook: I am happy to tell my hon. Friend that it is repeatedly pointed out to Indonesia that part of the process towards financial restructuring must be political reform,

and that that must go side by side with the IMF packages. With regard to the will of the people of East Timor, my hon. Friend will be pleased to hear that the troika ambassadors' conclusion was as follows:
It is our impression that there will be no lasting solution in East Timor without a firm commitment to some form of direct consultation of the will of the people there.
That report was published yesterday and is, of course, being made available to the Indonesian Government.

Mr. Nicholas Winterton: I welcome the Foreign Secretary's response to the original and the supplementary questions, but does he accept that Indonesia is the fourth largest country in the world, that it holds an important position in its part of the world and that, despite its current political and economic problems, it is a country with which we should have on-going constructive communication and contact at all times?

Mr. Cook: I am happy to assure the hon. Gentleman that we do do that. Only recently, the Minister of State, Foreign and Commonwealth Office, my hon. Friend the Member for Leeds, Central (Mr. Fatchett), visited Indonesia, when he met a variety of figures from Indonesian politics, including Xanana Gusmao, the imprisoned East Timorese leader. I entirely agree that Indonesia is one of the largest countries in the world and will one day will have one of the largest economies. I put it to the hon. Gentleman that, in the words of the Indonesian Foreign Minister as he expressed it once to me, East Timor prevents Indonesia from taking its full and rightful place on the world stage; it is a pebble inside his shoe which limits Indonesia's place on the world stage.

Mr. Alasdair Morgan: The Foreign Secretary will be aware that oil production is about to commence in the waters off the coast of East Timor. What steps can he take to ensure that the people of East Timor benefit from the revenues from that production rather than the Indonesian Government as a result of their illegal occupation?

Mr. Cook: The best way to ensure that the people of Indonesia benefit is to ensure that Indonesia is served by a democratic, accountable system of government. We remain in close dialogue with the Indonesian Government, pressing on them the importance of that, not just in the interests of the people of Indonesia but in the interests of the Indonesian economy.

Middle East Peace Process

Mr. Jim Murphy: If he will make a statement on the middle east peace process. [48702]

Dr. Brian Iddon: If he will make a statement on the current position regarding the middle east peace process. [48706]

The Secretary of State for Foreign and Commonwealth Affairs (Mr. Robin Cook): We remain committed to the Oslo process based on the principle of land for peace. Under the Oslo agreement, the third redeployment of land on the west bank to the Palestinian National Authority should take place next month. It is a


worrying measure of the delay to the peace process that there is as yet no agreement on the second redeployment, far less to a third redeployment.
We believe that the original US proposals for a redeployment of 13 per cent. remains the best way forward. We welcome the decision of President Arafat to accept the US package as a whole. We continue to urge Prime Minister Netanyahu to do likewise, which would be in the interests of the Israeli people, in the interests of the whole region, and in the interests of peace.

Mr. Murphy: I thank my right hon. Friend for that answer, which goes some way to answering the question before I ask it. Many right hon. and hon. Friends in the House consider themselves to be friends of the state of Israel. That does not mean that they are always friends of the Government of the state of Israel. Will my right hon. Friend add to his comments an assurance that pressure will be put on the Palestinian National Authority to ensure that terrorist activity occurring within that organisation is stopped and that the continuing desire within the Palestinian charter for the destruction of the state of Israel no longer exists? With that continuing pressure on the Government of Israel, we can once again have momentum, and land for a lasting peace, which the whole House supports.

Mr. Cook: We are very active with the Palestinian National Authority in seeking to win the war against terrorism. That is why Britain has seconded a security adviser to the team of the European special envoy on the middle east peace process and why we were able, during my right hon. Friend the Prime Minister's visit, to secure an agreement on security between the European Union and the Palestinian National Authority.
It is important that it is understood on both sides that, if we are to carry forward the peace process, the authority and the prestige of President Arafat must be maintained. That will not be possible if another participant in the talks constantly undermines the Palestinian status and position.

Dr. Iddon: It looks from the outside as though the Washington peace initiative has run into the sand. Unless the Israeli Government accept the package by the end of the present Knesset session, which is I believe 29 July, it looks like staying that way. Does my right hon. Friend agree that the Israeli Prime Minister's prevarications on acceptance of that package and events that have occurred recently in that region—not least of which was a serious attack on the Israeli Prime Minister by the Israeli President—have created a dangerous situation? Does he feel that it might be worth while for European leaders to try yet again to kick-start the middle east peace process?

Mr. Cook: I do not know whether the suggestion of a sitting in August would be any more welcomed in the Knesset than it would in this Chamber. All the details of the package have been known since 4 May and there can be no justification for continued prevarication in coming to a decision on that package. We have hitherto bent our efforts to ensuring that we supported the American proposals and encouraged both parties to accept those proposals. I am bound to say that I think that that was the right course because it was important that there should be no diversion from the peace process. Should we arrive at the point at

which the American initiative collapses and the United States withdraws from the process, that will obviously be a point at which European and other parts of the international community will have to consider what alternative way forward there may be.

Mr. Menzies Campbell: Does the Foreign Secretary remember the qualified optimism that greeted the Oslo peace accords and the feeling of admiration for the courage of Yitzak Rabin and Yasser Arafat—a feeling common both to friends of Israel and friends of Palestine alike—courage for which Yitzak Rabin ultimately paid with his life? We have come a long way since those days, have we not? Does the Foreign Secretary think that the current proposals to cede some 10 per cent. of the west bank to the Palestinians, or to expand the municipal boundaries of Jerusalem, are consistent with the spirit of the Oslo agreements?

Mr. Cook: I can frankly and candidly tell the hon. and learned Gentleman that we support the United States proposal of a 13 per cent. redeployment. That in itself is a major compromise by the Palestinians, which went into those negotiations seeking a 30 per cent. redeployment and has already come down to 13 per cent., which it has accepted. To invite the Palestinian negotiators to go further would be to leave them without credibility among their own people.
It was agreed at Oslo that Jerusalem should be settled in the context of the final status talks. We regret any action that unilaterally disturbs that agreement. We should like to get to final status talks, but, before doing so, there must be progress on the interim steps.

Mr. Nicholas Soames: Does the right hon. Gentleman agree that the American policy on the middle east has, for the past 10 years, proved a catastrophic failure, with serious consequences for the future of peace and the stability of the middle east? Does he agree that now is the time for Britain and the European Community to take a more independent and more robust line of their own? What steps does he envisage taking down that road?

Mr. Cook: We were absolutely right to make sure that we gave every possible opportunity for the American proposal to succeed. If we had produced, over the past two months, a diversion from the American proposal which had taken away from either party the pressure to sign up to it, we would not have been serving the cause of peace in the middle east. If it becomes evident over the next week or two that there is no way forward on the American proposal, others will have to become more active, but, for the present, I am not for letting up the pressure on Prime Minister Netanyahu to sign up to a package which is in the interest of his people and, on the most recent opinion poll, is supported by 60 per cent. of them.

Dr. Phyllis Starkey: One of the positive steps that the European Union has taken is the drawing up of an interim trade agreement with Israel and with the Palestine National Authority to encourage a commitment to peace in the area. Will my right hon. Friend confirm that, as part of that,


the European Commission is receiving monthly reports on human rights violations in the occupied territories by the Israeli Government? What action does the EU intend to take in respect of those violations, given that there is a human rights clause in the interim trade agreement?

Mr. Cook: My hon. Friend is correct; there is a human rights clause in all trading agreements reached by the EU. She is also correct to say that we monitor those agreements carefully; indeed, our embassies in Tel Aviv regularly produce a monitor on the growth of settlements in the occupied territories. We will continue that monitoring, and will certainly take action should we at any stage consider that to be appropriate.
My hon. Friend is right to draw attention to the fact that the trading agreement also applies to the Palestinian territories. We are anxious to achieve progress on the Gaza seaport and the Gaza airport so that the Palestinians can trade with the EU and the rest of the world.

BBC World Service

Mr. Donald Gorrie: If he will make a statement on future funding for the BBC World Service. [48703]

Mrs. Maria Fyfe: What recent representations he has received about the funding of the BBC World Service. [48707]

Mr. Ross Cranston: What steps he is taking through the grant-in-aid to enable the BBC World Service to provide a multimedia service. [48715]

The Secretary of State for Foreign and Commonwealth Affairs (Mr. Robin Cook): Future funding of the World Service has been considered as part of the recent comprehensive review of public sector expenditure. My right hon. Friend the Chancellor of the Exchequer will be making a statement to the House shortly.

Mr. Gorrie: I understand what the Foreign Secretary says, but we should compare financial support from Governments for international broadcasting in the current year. The United States spends 70 per cent. more than the United Kingdom, and Germany spends 40 per cent. more. In the light of that, will the Foreign Secretary ask the Chancellor to find a bit more money to help the World Service to produce the more modern services that it wants to provide, and to keep it in its well deserved position as the leading international broadcaster in the world?

Mr. Cook: I fear that, were I to do so, I should be a little bit late in the day, but I can assure the hon. Gentleman that I have been having words in my right hon. Friend's ear for some time. Although the hon. Gentleman rightly produced the relative spending figures, we should take pride in the fact that, despite the United States spending much more, the audience of the BBC World Service is double that of Voice of America—it is by far the most successful of the examples that he listed.

Mrs. Fyfe: As one of many British insomniacs who listen to the World Service every night, may I say how

much I appreciate its independence of mind and the unique quality of the service? Long may it continue, but does my right hon. Friend agree that there must be the necessary financial provision to achieve that and to keep the World Service apart from commercial pressures? Does he remember that the World Service faced a cut of £20 million under the previous Conservative Government, which only sustained pressure from the Labour party managed to avert?

Mr. Cook: Regrettably, we did not save the World Service from a 5 per cent. cut during the last Parliament. I think that the House will wait with interest to see what contrast is revealed this afternoon.

Mr. Cranston: I know from his earlier answers that my right hon. Friend considers the BBC World Service to be one of the country's most important resources, and that he will not allow the damage to be repeated.
May I ask a specific question about television services? As my right hon. Friend may know, Voice of America offers some six foreign language services, and Deutsche Welle some three. Will my right hon. Friend seriously consider varying the terms and conditions of grant-in-aid to allow the World Service to offer vernacular television language services?

Mr. Cook: My hon. Friend has raised a serious issue—the importance, in the modern media world, of the World Service moving with the times. Because of that, we have listened carefully to its proposals for increased digital transmission, and for the provision of an on-line service on the internet. It is important for the World Service to be available on the most modern outlets.
We are willing to look sympathetically at an amendment to the Vote to allow the provision of a television service, but the primary interest of both the Foreign Office and, hitherto, hon. Members has been in ensuring that vernacular radio transmissions continue. I do not think that any hon. Member would want the World Service to provide television at the expense of the current vernacular radio service.

Mr. Michael Fabricant: Is the Foreign Secretary aware that one of the legacies of the last Government is that the BBC World Service now has more listeners than not only Voice of America, but of Deutsche Welle and Radio Moscow's world service combined? Will he confirm that the current number of vernacular services will continue, and—just for the record—will he tell us exactly how many foreign languages are broadcast on the BBC World Service?

Mr. Cook: More than 40 vernacular services are provided.

Mr. Fabricant: Congratulations.

Mr. Cook: I appreciate the hon. Gentleman's congratulations; but his preening would be more justified if we had not inherited a World Service that had been cut throughout the last Parliament, and if I had not inherited from the last Administration a public spending plan that did not contain one penny for the Oman transmitter, which is the World Service's largest single capital project.

Brazil (Street Children)

Rev. Martin Smyth: What reports he has received on the killing of street children in Brazil. [48704]

The Minister of State, Foreign and Commonwealth Office (Mr. Tony Lloyd): I receive regular updates on the subject of street children, and have raised the matter directly with the Brazilian authorities on a number of occasions, most recently on 7 July.

Rev. Martin Smyth: I take it that the Minister will share my concern about the apparent further eruption of shooting of street children. Is he aware of the fear of those who work among them that some of it is being carried out by off-duty police officers, and does he know whether the authorities have taken action against those officers?

Mr. Lloyd: As I said, I have raised the issue with the national secretary for human rights, Dr. Gregori, who was in Britain last week. He has told me, on that and other occasions, that one of the first actions of the secretariat for human rights when it was established in 1997 was to study the role of the military police, and in particular their responsibility for the killing of street children.
That is a positive step, but there is no doubt that the climate of impunity in Brazil has in the past allowed the perpetrators of those atrocities to feel that they can continue without any real threat of sanctions. We are actively considering how we can help the Brazilian police with a witness protection scheme. Such a scheme would at least allow those who witness such heinous crimes to play a proper part in ensuring that the guilty are brought before the courts and, hopefully, given exemplary sentences that will lead to a proper sense of justice.

Mr. David Taylor: Is the Minister aware that, in a recent parliamentary answer, the Secretary of State for International Development said that 250 million children in this world of ours—that is an astonishing figure—work for wages or act as pickpockets or prostitutes? Is he further aware that, during their time in government, the Conservatives consistently and continually opposed reference of such child labour issues to the World Trade Organisation? Does he agree with me that that places them firmly in the camp of the exploiters, and not on the side of the exploited?

Mr. Lloyd: My hon. Friend is right to say that failing to protect children and to provide a proper legal framework nationally and internationally is not acceptable. Those who were responsible for such matters should seriously examine how that was allowed to happen. However, that contrasts with the role that the present Government have played. My hon. Friend will probably be aware that the Secretary of State has been instrumental in ensuring that the issue of child prostitution has been kept at the top of the agenda internationally. Those discussions will be taken forward yet again this year with a view to ensuring that those who commit the crime of abusing young children through prostitution are brought to justice in this country, and globally.

Nuclear Tests (India and Pakistan)

Sir Teddy Taylor: If he will make a statement on relations with India and Pakistan following their recent decision to place a moratorium on future nuclear tests. [48705]

The Secretary of State for Foreign and Commonwealth Affairs (Mr. Robin Cook): It is important that both countries now respond to the requirements of the international community, particularly to refrain from developing nuclear weapon systems and to adhere to the global non-proliferation regime without conditions. As a step towards meeting those requirements, we welcome the moratoriums on nuclear testing.
As a friend of both countries, Britain wants to see a solution that will promote stability and reduce tension in the sub-continent. Last week, we hosted a meeting of experts from a dozen countries to consider how we could all help India and Pakistan to promote confidence-building measures and to join arms control agreements such as the comprehensive test ban treaty.

Sir Teddy Taylor: India and Pakistan are our friends and allies. Every one of us should have a feeling of guilt that we left those countries with unresolved nightmares, of which Kashmir is only one. Will the Foreign Secretary make it abundantly clear that he will use all his power to seek to resolve these nations' problems with the international community, especially in view of the fact that they are now making a positive response by placing an embargo on future tests? Will Britain do its best?

Mr. Cook: I welcome what the hon. Gentleman says today about our efforts to try to resolve the problem of Kashmir, although I would have welcomed such sentiments when this matter was discussed last November following the remarks that I am alleged to have made on Kashmir. The international committee attaches the highest importance to trying to resolve the source of the tensions between India and Pakistan. This is primarily a matter for the parties in the first instance, and they must try to find a solution that is acceptable to all the people of Kashmir—whether Hindu, Buddhist or Muslim. However, if they require the support of the international community, I am sure that it will be forthcoming.

Mr. Ernie Ross: Will my right hon. Friend take every opportunity to continue to express to his opposite numbers in Pakistan and in India the real concerns felt by our constituents when those countries carried out nuclear tests? Will he reinforce the message that, rather than increase their country's security, they led to a much less stable south-east Asia, and lowered the standing of both countries within the international community?

Mr. Cook: Any observer of the situation involving the two countries is bound to conclude that the tests have increased tension rather than increased security. The tragedy is that the tests have given fresh impetus to the voice of extremism, and not to the voice of moderation.

Mr. Tony Baldry: Does the Foreign Secretary consider it a matter of concern that the Foreign Office did not seem to have any intelligence or forewarning of the recent Indian nuclear tests?

Mr. Cook: It is a matter of concern, not only to us, but to our partners. The hon. Gentleman will appreciate that I cannot say anything further on intelligence matters.

Sierra Leone

Mr. Dennis Skinner: What recent meetings he has had with other Commonwealth countries regarding Sierra Leone. [48708]

The Minister of State, Foreign and Commonwealth Office (Mr. Tony Lloyd): I discussed Sierra Leone at the most recent meeting of the Commonwealth Ministerial Action Group on 2 and 3 March. I then took part in a CMAG mission to Sierra Leone on 31 March with colleagues from Zimbabwe, Ghana, Canada and Malaysia.

Mr. Skinner: When my hon. Friend next meets Commonwealth Ministers, will he tell them that a debate that was staged last week on Sierra Leone—one of those great parliamentary occasions that was much heralded—turned out to be a damp squib? It seems that the caravan and the barking dogs of the Opposition have moved on and are encamped on Derek Draper's doorstep.

Mr. Lloyd: My hon. Friend will forgive me if I mention only in passing last week's debate. I might tell my colleagues in the ministerial action group that, although the Opposition wanted to enter a narrow blind alley in that debate, the reality of Sierra Leone is continuing murder, mutilation and torture of innocent civilians by the Revolutionary United Force rebels. The world might think that that was a far more serious issue for Britain and British foreign policy. We look forward to the Opposition joining in a serious debate about the future of all the people of Sierra Leone, including those who will have to overcome the memories of the torture, the horror that so far the Opposition have failed to mention.

Mr. Edward Garnier: Can the Minister say whether the report by Sir Thomas Legg will be published before the recess?

Mr. Lloyd: As the hon. and learned Gentleman ought to know, the Legg report is an independent one. Not long ago, Sir Thomas Legg wrote to the Chairman of the Foreign Affairs Select Committee advising him that he still hoped that the report would be with the Secretary of State by the time that Parliament rises.

EU Enlargement

Mr. Ian Pearson: What consultation he plans to have with other EU countries on proposals for Agenda 2000 relating to EU enlargement. [48709]

Mr. Don Touhig: What consultations he plans to hold with other European Union countries on Agenda 2000 in respect of EU enlargement. [48719]

The Minister of State, Foreign and Commonwealth Office (Mr. Doug Henderson): The Cardiff European council agreed to adopt the Agenda 2000 proposals by June 1999. In the meantime, Agenda 2000 and European Union enlargement will be the key issue in my regular contacts with my European colleagues.

Mr. Pearson: I welcome the rapid progress towards admitting the five central and eastern European accession countries to the European Union. Does my hon. Friend agree that, just as the EU should be regarded by British companies as their home market, so should Poland, the Czech Republic, Hungary, Slovenia and Estonia? Is he aware that, in terms of export performance and direct foreign investment, Britain compares badly with Germany, France and many other EU countries? In conjunction with the Department of Trade and Industry, will he consider what further steps the Foreign and Commonwealth Office can take specifically to target those accession countries so that we can assist and encourage British businesses to do more work there?

Mr. Henderson: I am grateful to my hon. Friend for that question, because it is pertinent to the whole enlargement issue. Enlargement offers an enormous opportunity to British exporters. Those new marketplaces can create a huge number of jobs in Britain, but that will happen only if we take the opportunity that is open to us. A priority of my Department and the Department of Trade and Industry is to try to stimulate British interests, not only in exports, but in investment in those areas.

Mr. Touhig: Is my hon. Friend aware that, while enlargement of the European Union is broadly welcome, at least on this side of the House, it must be accompanied by reform of the common agricultural policy? The previous Government ignored such reform, and cost us millions of pounds as a consequence. Does he agree that we must reduce the proportion of the European Union budget that is used for the common agricultural policy, and that that must be at the core of the Government's programme and their policy on enlargement?

Mr. Henderson: My hon. Friend is right. In the long term, it is essential that the objective that he has identified is attained by the European Union. He is also right to highlight the fact that, over all the years of Conservative government, there was no progress on reform of the agricultural policy. We have better relations with our European counterparts and we shall be able to take advantage of the opportunity to negotiate. The Commission has presented reform proposals on cereals, dairy products and beef, which will potentially save British consumers £1 billion a year. That is a highly desirable objective, and it is a top priority in the negotiations.

Mr. David Heath: Does the Minister support the view of the Austrian Foreign Minister, Mr. Schüssel, that negotiations on the process of enlargement should be accelerated? Will he give every support to the Austrians in their view that significant progress can be made on common agricultural policy reform during their presidency?

Mr. Henderson: It is important for the management of the European Union that there should be continuity


between one presidency and the next. I hope that we established good continuity with our Austrian friends. The priorities identified by the hon. Gentleman are priorities of the Austrian Government, which we support.

Mr. Michael Howard: Does the Minister agree with the Financial Times that
failure to inject momentum into reforms
on Agenda 2000 was the
"most dispiriting aspect"
of the Cardiff summit? Does he agree with the Finnish Prime Minister that enlargement after the British presidency is
looking more problematic than it did a year ago"?
The Foreign Secretary described enlargement as one of the top priorities of the presidency. Is not the truth that it was one of its biggest flops?

Mr. Henderson: I do not mind taking criticism where criticism is due, but, on the matter of taking the process of EU enlargement down the track, the Government played a crucial role in making sure that speedy progress was made. That is acknowledged by all our partners in the EU, as the right hon. and learned Gentleman will find if he speaks to them. An important European conference took place in March, which was described by the Romanian European Minister as an historic day. That feeling was shared by all the countries of central and eastern Europe.
The accession process began on 30 March. I have even had some central and eastern European countries complaining that we were asking them to make progress too speedily, and they were not ready for some of the screening tests. I am happy to take such criticism. Our friends in those countries have now got their act in order and are making progress. I am confident that enlargement is on track and will be achieved.

Ms Patricia Hewitt: Will my hon. Friend take this opportunity to congratulate the British Council on the work that it is doing, building relationships with key members of the communities in the accession countries? Does he agree that it is enormously to the benefit of the United Kingdom and our partners in the European Union for us to take a leading role in building those relationships in the accession countries?

Mr. Henderson: My hon. Friend is right. I want to put on record the important role that the British Council plays in building relationships not with Governments or even with Opposition parties, but with the people and institutions of those countries. Such progress on the ground pays back rewards in the future. That is why it is essential that it continues to be a top priority of the British Council.

Nigeria

Mr. Ian Bruce: What discussions his Department has held with the Nigerian regime about restoring democracy to that country. [48710]

The Minister of State, Foreign and Commonwealth Office (Mr. Tony Lloyd): I visited Nigeria on 25 and 26 June. I had a constructive meeting with General Abubakar. I reiterated our support for an early restoration of democratic civilian rule and called for the release of Chief Abiola, whose death is particularly tragic when we

believed that his release had been imminent. I also called for the release of all other detainees and for the United Nations Commission on Human Rights special rapporteur to visit Nigeria.

Mr. Bruce: Does the hon. Gentleman agree that we should continue with the arms embargo on Nigeria? Will he confirm that British companies—certainly some companies—were arming Nigerian troops when they were in Sierra Leone? What is he doing to make sure that Sir Thomas Legg looks into the matter? That clearly was a breach of an arms embargo to a regime that we all condemn.

Mr. Lloyd: Let me explain to the hon. Gentleman that the common position of the European Union, including the arms embargo, is still in force and will continue until we see the return of Nigeria to civilian government and the release of all political detainees. Those have been the common demands of the entire European Union. Although we have no knowledge of British companies arming Nigerian troops in Sierra Leone as part of the ECOMOG forces, that would not be in breach of the EU arms embargo. The embargo is specific to the territory of Nigeria and as such would not be a matter that arose as a breach—[HON. MEMBERS: "Oh.!"] Opposition Members may find that difficult to understand, but it is a simple statement of the legal position.

Mr. David Hanson: Can my hon. Friend tell me what steps the British Government took to verify the cause of death of Chief Abiola? Can he give an idea of the steps that he intends to take to help secure the early release of other detainees? Will my hon. Friend assure the House that commercial interests will be put second to human rights interests in Nigeria?

Mr. Lloyd: Let me take the final part of my hon. Friend's question first. The difference between this Government and the previous Government is that our policy on Nigeria has always been pursued as one about principle and about the need for restoration of democratic forms of government. That will continue now and in the indefinite future, because it is what the Nigerian people want and deserve.
On the tragic death of Chief Abiola, the post mortem was attended by a number of outside experts at the request of the Abiola family. Dr. Richard Shepherd, a British pathologist, was in attendance and took part in the preparation of the interim report on Chief Abiola's death, which states that it was death by natural causes. We await the final report. The Government have stated repeatedly—I put this again to General Abubakar when I was in Nigeria recently—that one of the conditions that must be met for Nigeria to rejoin the family of democratic nations, and certainly to rejoin the Commonwealth, and to see the lifting of the EU common position involves the release of all political detainees, including the 20 Ogonis.

Mrs. Cheryl Gillan: There is no doubt that the whole House wishes to see Nigeria return to stable and democratic government. To that end, the British Council has been playing an important role through its good governance programme. Its programmes included supporting organisations trying to reduce and expose corruption, training and informing human rights


workers, and conflict management training, which has even resulted in getting opponents around the table for the first time since four years ago when they were killing each other. Does the Minister agree that that work is invaluable and that failure to sustain the budget of the British Council in that region could severely jeopardise progress towards democracy? Can he give the House a guarantee that there will be no reductions to that vital budget and no fiddling of the figures to try to present a glossy picture in the spending review?

Mr. Lloyd: I find it astonishing that an Opposition Member should talk about cuts in the British Council budget after the damage that the previous Government inflicted on the work of the British Council on a global basis. It is truly astonishing that the hon. Lady should have the gall to come to the Dispatch Box with that statement. However, the hon. Lady, like the whole House, must wait with patience to hear the statement from my right hon. Friend the Chancellor of the Exchequer in just a few minutes. I hope that, at the end of that statement, she will have the good grace to be fulsome in her congratulations and to reflect on her need to criticise the actions of her colleagues when they were in government.

Developing Countries

Helen Jackson: When he will next meet his European counterparts to discuss EU relations with developing countries. [48711]

The Minister of State, Foreign and Commonwealth Office (Mr. Doug Henderson): I discuss aspects of the EU's relations with developing countries at most meetings of the General Affairs Council. The next General Affairs Council will be on 5 October.

Helen Jackson: The European Union has a very proud record of support for black independence and the anti-apartheid movement in southern Africa. Those emerging countries depend for their continuing success on developing successful trading conditions. Can the Minister tell me what Britain is doing positively within the European Community to develop fair trading agreements within Europe as an economic community and with the countries of the Southern African Development Community?

Mr. Henderson: Essentially, we are doing two things. First, where we can, we are supporting bilateral arrangements between the European Union and countries in southern Africa. We have pushed firmly over the past six months to try to conclude an agreement with South Africa, urging that more flexibility be shown. Secondly, we have taken action on the Lomé agreement, which relates to trade matters and other related matters between the European Union and the African, Caribbean and Pacific countries.
At the General Affairs Council at the end of June, agreement was reached on the European Union negotiating mandate. Negotiations will begin on 30 September. We shall be pushing hard to ensure that a firm and fair deal is reached that will be of considerable

advantage not only to the European Union but to countries that are members of the African, Caribbean and Pacific group.

Mr. Bowen Wells: Does the European Union support a Nigerian being appointed to head the Sierra Leone army?

Mr. Henderson: I am grateful to the hon. Gentleman for that question, although I am not quite sure how it relates to the main question. I shall look into the matter and come back to him on it.

Ms Tess Kingham: Will my hon. Friend take the opportunity when meeting his EU counterparts to mention the increasingly worrying situation in Western Sahara? Morocco seems to be taking every opportunity that it can to obstruct—it is hellbent on objecting to—the Western Sahara referendum. Will he guarantee the House and assure the Saharawi people of Western Sahara that we shall not allow Morocco to foil the long-awaited referendum process in Western Sahara, and that we shall push our EU counterparts to ensure that that referendum takes place as soon as possible?

Mr. Henderson: I am grateful to my hon. Friend, and hope to reassure her that we shall be doing everything we can to support the Baker process, which is trying to improve the situation in countries that are crucial in the relationship between the European Union and the ACP group.

Mr. Robert Maclennan: In the light of evidence of disruption of the Togo elections by President Eyadéma, and the European Union observer's report that the Togo Government wrongly stopped counting in the middle of that election, will the Minister discuss with his European counterparts what measures would be appropriate to take to bring Togo back to a democratic path?

Mr. Henderson: I can assure the right hon. Gentleman that we shall do what we can about the matter by raising it at the European Union African working group. The Minister of State, Foreign and Commonwealth Office, my hon. Friend the Member for Manchester, Central (Mr. Lloyd), who deals with Africa matters, has been in contact with the opposition parties in Togo. We are hoping that that contact will help to create a situation in which stability can be established.

European Union (Public Information)

Mr. Bill Rammell: If he will make a statement on the Government's proposals to provide increased public information on the decision-making process in the European Union. [48712]

The Minister of State, Foreign and Commonwealth Office (Mr. Doug Henderson): We made good progress during our presidency of the European Union to make EU decision making more open—for example, by an agreement to establish a public register of Council documents. We shall continue to push for greater


openness—for example, in measures to be drawn up for implementation of the relevant provisions of the treaty of Amsterdam.

Mr. Rammell: I thank the Minister for that response, and welcome the real progress that was made during the British presidency. Will he urge his Austrian colleagues to continue making greater transparency in European decision making a priority? Specifically, more Council of Minister meetings have to be opened up to the press and public. Will he also endorse the developing practice in the House of Ministers appearing before Select Committees both before and after Council of Minister meetings? Such measures will bring greater legitimacy to the decision-making process in Europe.

Mr. Henderson: I am grateful to my hon. Friend. I think that Hansard will show that Ministers from my Department have attended Select Committee sittings on many occasions—and on more occasions than our predecessors in the previous Government. We take seriously that form of scrutiny and accountability.
If the European Union is to build public support and carry the European public with it through the difficult times ahead, as the big issues of European Union enlargement are dealt with, it is crucial that the European public should know what is happening and, based on that knowledge, become committed to those events. The need for such knowledge is why we have extended open debates, and why, during our presidency, we increased public scrutiny at General Affairs Council meetings and introduced a public register. It is also why we shall continue to press for implementation of more measures arising from the Amsterdam treaty.

Mr. Michael Trend: In their half-time presidency report, the Government described one of their key achievements as
a seminar of government press officers
agreeing to disseminate more information about the EU via the internet. Will the Minister now reveal how this bold and striking achievement is progressing? Does the database include, for example, unhelpful comments such as those made in the Daily Express on 13 June by a certain Mr. Derek Draper—then still a member of the charmed circle—who, with massive irony, challenged his readers:
Did you know that Britain had a Minister for Europe? Do you know his name?
Can the House have some clarity on that failure to communicate with the public?

Mr. Henderson: The hon. Gentleman should by now have learnt not to believe everything that he reads in the newspapers, and perhaps not even everything that he reads on the internet. The internet is a modern form of communication. It might not be terribly open to hon. Members, but I assure the hon. Gentleman that most young people in this country use it. That is why it is important that we maximise the information about the European Union and, for that matter, other issues of parliamentary interest on the internet.

Mr. Barry Sheerman: Will my hon. Friend ignore those silly comments from that member of the Opposition Front-Bench team, and agree that the

internet is a very powerful tool for communication with the parliamentarians of Europe, of whom there are nearly 5,000? Will he take some interest in the group of parliamentarians entitled Interparle, which is actively campaigning and putting together a programme that will provide access, information and knowledge, as it is those things that will strengthen the European Union?

Mr. Henderson: I completely agree with my hon. Friend. I hope that he will accept that my main answer covered the matters that he raises. I found it amusing the other day that, when I told a European Union ambassador that I was going to meet another ambassador from the European Union after my meeting with him, he said that he knew I was, because it was on the internet.

Kosovo

Mrs. Ann Winterton: If he will make a statement on the situation in Kosovo. [48713]

The Secretary of State for Foreign and Commonwealth Affairs (Mr. Robin Cook): The situation in Kosovo remains tense and there is a real risk of further deterioration, unless there is serious political dialogue between both sides.
We continue to work with our contact group colleagues to broker dialogue between Belgrade and Pristina, with our European partners to monitor the behaviour of security forces, with the Red Cross and the United Nations to support refugees, and with our NATO allies to deter military offensives against centres of civilian population. The quicker that President Milosevic accepts that there must be meaningful autonomy for Kosovo, the better will be the prospects for a negotiated solution.

Mrs. Winterton: Bearing in mind the imperative of preventing Kosovo from declining into a second Bosnia, will the Foreign Secretary say what concrete progress the British Government and the European Union have made in the pressure exerted so far on the Serbian president, Mr. Milosevic? Does he believe that other leaders, especially perhaps President Yeltsin of the Russian Federation, can play a constructive part in helping to achieve a politically brokered solution in Kosovo?

Mr. Cook: The hon. Lady asks about the practical steps that we have taken. We have imposed an arms embargo, a visa ban and an export credit moratorium; we have frozen the funds held abroad by both Serbia and the Former Republic of Yugoslavia Government; and we have now introduced a ban on flights by the Serbian airlines. If the hon. Lady has any ideas to add to that list, we would willingly accept them.
I understand what the hon. Lady says about President Yeltsin. We welcome the offer made by President Milosevic to him. Sadly, the evidence to date is that President Milosevic is not honouring even the commitments that he made to President Yeltsin.

Mr. Ben Bradshaw: Does my right hon. Friend believe that the Government's policy of limited autonomy for Kosovo is still tenable, given that months


of Serb aggression in that province mean that a growing majority of Kosovars will settle for little less than full independence?

Mr. Cook: My hon. Friend is absolutely right to say that, if President Milosevic had responded to our urging three months ago to enter into negotiations for meaningful autonomy, we might well have been able to achieve a solution which, frankly, might have been more acceptable in Belgrade than anything that is likely to be agreed now. However, we have to be extremely careful about endorsing any demand for independence, because of the wider impact on the region. If we concede independence in Kosovo, how do we resist those who are demanding independence for the Republika Srpska in Bosnia, which would defeat both the Government's policy and that of the previous Administration?

Mr. John Wilkinson: Ultimately, will not self-determination be the only democratic road to peace? As the Government believe in self-determination as the correct justification for our role in the Falkland Islands and for the majority will to prevail in Northern Ireland, how can they set their face against self-determination as a potential cure for the insidious conflict that prevails in Kosovo?

Mr. Cook: If the hon. Gentleman wishes to take a stand on democracy, let me remind him that, only two months ago, Dr. Rugova was re-elected by the overwhelming majority of the Kosovo people in a ballot that the Kosovo Liberation Army urged them to ignore and despite a boycott that they chose to ignore. Dr. Rugova and those around him have repeatedly made it clear that they are willing to enter into negotiations without precondition.

Ms Rachel Squire: I share my right hon. Friend's concern that any move towards independence for Kosovo could lead to greater ethnic-based conflicts in Europe. Following a previous question, does he agree that every effort must be made to persuade Russia that it is in its best interests to end the continued conflict in Kosovo, that it has a crucial role to play in achieving a peace settlement and that, in the long term, peace and prosperity for the Russian people and for Europe can best be achieved by Russia and NATO working in partnership?

Mr. Cook: I assure my hon. Friend that we lose no opportunity to urge those views on Russia. Russia well understands that its own interests in the Balkans will not be served by supporting one regime that is increasingly isolated there.

Mr. Michael Howard: On 10 March, the Foreign Secretary said that President Milosevic had been given 10 days to withdraw paramilitary forces from Kosovo. On 7 April, he said:
we are determined that Belgrade should stop behaving as it is in Kosovo".—[Official Report, 7 April 1998; Vol. 310, c. 146.]
On 8 June, he said:
Mr. Milosevic should back down and he should back down now. This is his last warning.
Given the continuing deterioration in Kosovo, which is of deep concern to us all, has the Foreign Secretary yet learned the futility of empty threats?

Mr. Cook: If the right hon. and learned Gentleman looks at what has happened in Kosovo since 8 June,

he will find that President Milosevic has not returned to the major military offensive that he was conducting then, which rendered 50,000 people homeless in a single week. If the right hon. and learned Gentleman really wants progress in Kosovo—and I am not clear from his question whether he does—he should not suggest to President Milosevic that the warnings of NATO and the Contact Group of the United Nations are empty threats.

EU Institutions

Mr. John Healey: If he will list his proposals for the reform of the European Union's institutions. [48714]

Mr. Gareth R. Thomas: What proposals he is putting forward to reform the European Union's institutions. [48718]

The Minister of State, Foreign and Commonwealth Office (Mr. Doug Henderson): At this stage, the Government have no formal proposals for reform of the institutions. However, we are examining future developments in the European Union and how Britain should approach them.

Mr. Healey: Is not Britain's gross domestic product per head now the fourth lowest in the European Union? Does my hon. Friend accept that the reform of the European structural funds must fully reflect the structural problems in the United Kingdom? What reassurance can he give areas such as South Yorkshire that there will be an increase in the United Kingdom's take of European structural funds in general and an increase in objective 1 funding in particular?

Mr. Henderson: I thank my hon. Friend for that question. If we are to proceed with the enlargement of the European Union, structural funds must be available to help the economies of central and eastern Europe to develop. That will augur well for our exports. The rest of the funding available to the European Union has to be allocated among the existing member states. A fair solution must be reached, taking account of priorities such as those that my hon. Friend mentioned in South Yorkshire.

Mr. Thomas: Is not one reason why the Conservatives failed to deliver any significant reform of EU political institutions the intemperate and extreme language used by the present shadow Foreign Secretary and his colleagues on most matters European? Will my hon. Friend assure me that he will continue to press for measures to improve the environment in areas such as the common agricultural policy?

Mr. Henderson: My hon. Friend is right. I am sure that the House realises that a Government cannot negotiate with their EU partners unless they have established a relationship. Each country emphasises its priorities, and, through a process of negotiation, deals have to be reached for the European Union. Those involved must be committed to the European Union and feel that a fair settlement has been reached. That is vital for reform of the common agricultural policy, to which I have already referred.

Comprehensive Spending Review

The Chancellor of the Exchequer (Mr. Gordon Brown): The Government's central objectives are high and stable levels of growth and employment and sustainable public services, built from a platform of long-term stability. To achieve this, two fundamental economic reforms have been undertaken for the long term: to take monetary policy out of party politics through operational independence for the Bank of England; and to impose a new framework of financial discipline by applying fiscal rules that achieve a current budget balance and prudent levels of debt to national income.
Last May, we imposed a two-year spending limit, and we have kept to this limit. We promised to cut public borrowing, and it has been cut by £20 billion. That fiscal tightening will be locked in to next year. To meet our fiscal rules, and in line with cautious and published assumptions, audited by the independent National Audit Office, we plan current surpluses for the next three years of £7 billion, £10 billion and £13 billion. As a proportion of national income, debt will fall below 40 per cent. By the end of this Parliament, debt interest payments will be £5 billion a year lower than if we had simply left borrowing at the level inherited from the previous Government.
In the last economic cycle, under the previous Government, the current budget deficit averaged 1.5 per cent. of national income—the equivalent of £12 billion a year extra borrowing. During the 1990s, national debt doubled. Over this economic cycle, and for the first time for decades, Britain is set to have both a current budget in balance and a sustainable approach to debt—an approach that is among the most prudent of our G7 partners, and more prudent than that of our predecessors.
All the allocations that we make this afternoon are made within and subject to this overall financial discipline, which I set out in the "Economic and Fiscal Strategy Report", published last month. Through our new deal for the unemployed, we are tackling the bills of economic failure. Under the plans published today, the growth in social security spending for this Parliament will be significantly lower than in the previous Parliament.
Working within that framework, the comprehensive spending review has examined the most effective use of public money across and within each Department. I am grateful to my right hon. Friend the Chief Secretary to the Treasury, and to the Public Expenditure Committee of the Cabinet, for all their work.
By looking not just at what Government spend but at what Government do, the review has identified the essential modernisations and savings. The review's first innovation is to move from the short-termism of the annual cycle to the drawing up of public expenditure plans not on a one-year basis but on a three-year basis. The review's second conclusion is that all new resources should be conditional on the implementation of essential reforms: money, but only in return for modernisation; Government moving out of areas where they need not be; and, in areas where public service matters, Government setting clear targets for modern, efficient and effective services.
Today, we begin, not, as all spending announcements over the past 30 years have traditionally begun, with annual allocations, but by setting out the new three-year objectives and targets for each service. Therefore, the results that we are demanding, the new standards of efficiency that will have to be met to ensure that every penny is well spent, the procedures for scrutiny and audit that will be set in place, and the reforms that we have agreed, are all based on a modern and clear understanding that Government should do only what they have to do, but do what they do to the highest standard. I shall set out the essential changes.
First, each Department has reached a public service agreement with the Treasury—essentially a contract for the renewal of public services. In each service area, the contract requires reform in return for investment. The new contract sets out the departmental objectives and targets that have to be met, the stages by which they will be met, how Departments intend to allocate resources to achieve those targets and the process that will monitor results. The Prime Minister has decided that that continuous scrutiny and audit will be overseen by a Cabinet Committee, continuing the work of the Ministerial Committee on Public Expenditure. Money will be released only if Departments keep to their plans.
Secondly, the contract will stipulate new three-year efficiency targets for the delivery of services. Targets will range between 3 per cent. and 10 per cent; their terms will be made public. The purpose of the efficiency targets is to ensure that more resources go directly to front-line services: patient care in the health service, classroom teaching and fighting crime—a policy of promoting front-line services so that, by securing greater value for money, we secure more money for what we value.
Thirdly, in addition to efficiency targets, we have embarked on a programme of radical reform. To achieve our priorities, difficult decisions and choices have had to be made. We have already reformed student finance; we have begun welfare reform, matching rights with responsibilities; and, as a result of the comprehensive review, further reforms will be announced in legal aid, in procedures for asylum, in child benefit, in youth justice and with the withdrawal of unjustified subsidies. Further reforms will be announced by Ministers in forthcoming statements.
In defence and in the Foreign Office, we have achieved the changes necessary to provide us with the defence and diplomatic capability we need, while making necessary savings by, for example, reducing the number of warships and establishing a new public-private partnership for the Defence Evaluation and Research Agency.
Fourthly, for central and local government, we have agreed a programme for releasing assets we do not need, to fund £11 billion-worth of additional new investment in health, education, transport and other capital projects that we urgently need. With a number of further announcements today, our policy of promoting public-private partnerships is extended into new areas, including national science policy, urban policy and overseas development.
Fifthly, while we are raising capital investment for three years to tackle the backlog of underinvestment that was bequeathed to us, current spending will grow by no more than 2.25 per cent. We must ensure that public


sector pay settlements are fair and affordable, and do not put at risk our target for public service improvements in each of the next three years, for which we have budgeted.
In line with three-year allocations, the independent pay review bodies will report not just to the Prime Minister but to the departmental Ministers who have to meet those public service improvement targets and who will respond to the recommendations.
Consistent with the three-year allocation, we are announcing a further strengthening of the pay review system. Having spoken to the chairmen, the Prime Minister has confirmed that their remits, in addition to the responsibility to recruit, reward and motivate staff—and therefore their role—will be strengthened with three responsibilities. Their recommendations will take account of affordability—in other words, the current departmental spending limits; of the Government's inflation target of 2.5 per cent.; and of the need to achieve the Government's targets for output and efficiency.
That reform offers the opportunity for the public services to manage their pay and conditions more directly, but also gives Departments the responsibility to ensure that pay settlements cannot be determined without regard to the demands of the service. In that way, as in every other organisation, pay decisions will now be made in relation to the overall objectives of the service.
Perhaps the most important advantage of conducting a comprehensive spending review is the opportunity that it allows for individual services to put in place a substantial reallocation of resources within Departments—from bureaucracy to front-line services, from dealing with the symptoms of problems to dealing with their causes—and to consider a co-ordinated approach that breaks free from the old departmental fragmentations and duplication.
As a result of interdepartmental reviews, services for asylum seekers will now be managed by one Department rather than five, and the three Departments responsible for criminal justice will work together to one set of objectives. Children's services, the urban regeneration budget and our approach to tackling fraud will all be reorganised, achieving both efficiencies and savings, and other reforms will be announced by Ministers in the next few days.
Our prudence has been for a purpose. It is because we have set tough efficiency targets and reordered departmental budgets that our top priorities of health and education will receive more new money than the other 19 Government Departments combined. To accommodate that, we have had to take a firm line with other spending programmes and rigorously to select priorities. As a result, more than half of today's allocation will be invested in health and education—so there will be additional resources, but they represent money in return for modernisation.
I now turn to the allocations to individual services. Here, the main conclusion of the spending review is that it is not only a social duty for Government to invest in good public services to improve our social fabric, and to tackle poverty and deprivation by extending opportunity, but that most people in Britain, apart from a small and extreme minority, agree that it is also in the economic interests of our country to create an infrastructure of opportunity and to invest in education, science, transport and strong communities, so that individuals can make their contributions to the economic well-being of this country.
Invest in the education of our children, and we are investing in our future. In the old economy, it was possible to survive with an education system that advanced only the ambitions of the few; the new economy demands an education system that advances the ambitions of all. However, the investments that we make will take place only in exchange for further modernisation and reform.
The Secretary of State for Education and Employment has agreed not only to set numeracy and literacy targets for 11-year-olds, but to set Government targets for nursery education, for cutting truancy, for higher attainment by teenagers, for improved standards of teaching, including a qualification for head teachers, for greater efficiency in further and higher education, and for the inspection of schools. In return for investment there will also be further reforms in teacher training and in the administration of school budgets.
At every stage, we are linking new investment with reform, and it is on that basis that the Secretary of State for Education and Employment will tomorrow announce the biggest single investment in education in the history of our country. For that service, and for other services, there will be separate announcements, based on the Barnett formula, for Scotland, Wales and Northern Ireland.
In the last three years of the Conservative Government, the growth in education spending was £7 billion. I can confirm that, for the next three years, additional education expenditure will total £19 billion. In total, we shall spend £3 billion more next year, £6 billion more in 2000 and £10 billion more in 2001. That is what we mean by "Education, education, education"—honouring our manifesto commitment to the British people.
In the 18 years of the Conservative Government, spending on education rose on average by 1.4 per cent. a year. Education spending will now rise in real terms by an average of 5.1 per cent. a year until the end of the Parliament.
We said that we would devote a rising share of national income to education, and we have. Spending on education will now rise to 5 per cent. of national income. Today, about 1 million children are still being taught in classrooms built before the first world war. Some 6,000 schools are already being refurbished this year. Over the Parliament, capital investment to re-equip our schools will now double. Following our reforms in student finance, there will now be an expansion in the numbers of students in higher and further education by the end of this Parliament—more than 500,000 additional students.
We said that we would meet our class size pledge for five, six and seven-year-olds. Under the proposals that my right hon. Friend the Secretary of State for Education and Employment will announce tomorrow, our pledge will be met as we promised.
Investing in education is essential to secure both a fairer society and an efficient economy. If our country is to be equipped and prepared for the competitive challenges ahead, the Government also have an economic responsibility to invest in science and innovation, in our transport infrastructure and in building safer and stronger communities. Net public investment will be doubled as a result of the Government's new fund for investing in Britain's future, but in every area, investment is


conditional on further reform. It is the development and application of ideas and inventions in science that hold the key to improved national competitiveness in the future.
As a result of a reduction in subsidies that can no longer be justified, and also as a result of £400 million in support from the Wellcome Foundation—which I thank for its generosity—the Government are able to announce the biggest ever Government-led public-private partnership for science for this country. A total of £1.1 billion will now be available to provide the modern facilities for science research and teaching at our universities and to support science teaching and research throughout the country. This innovative step change in our approach to science will lay the foundations for putting Britain at the forefront of the next generation of scientific and industrial research.
Any one who travels on our roads and railways knows that, after years of neglect and under-investment, Britain suffers from an overcrowded, under-financed, under-planned and under-maintained transport system. So for transport, also, we propose reform—a new investment strategy that will involve a network of public-private partnerships—like those for the underground, the channel tunnel rail link and air traffic control—and a commitment to more integrated planning of public transport. In return for those innovations, there will be £2 billion more investment. From a 25 per cent. decline in transport investment in the last Parliament, there will be a 25 per cent. increase in the next three years for investment in public transport and also to meet our environmental objectives. Full details will be set out by my right hon. Friend the Deputy Prime Minister in the transport White Paper next week.
Economic success and social cohesion depend on safer and stronger communities. That is why we will now invest more in the prevention of crime. That is why today we also propose a policy reform to tackle the underlying causes of poverty in the most hard-hit estates. It is because we are announcing major modernisations that will put legal aid on a fairer footing and will reform youth justice, that more resources can be made available for policing and, for the first time, substantial resources for innovative, evidence-based crime prevention work that can reduce crime. Measures to tackle drug abuse will have a new priority, with a 25 per cent. increase in funding. Further details, including targets that will have to be met, will be announced by my right hon. Friends the Home Secretary and the President of the Council.
To build stronger communities, it is clear that we need to renew housing stock. To cut out waste and to ensure the best use of resources, the Deputy Prime Minister will impose new guidelines for greater efficiency in construction and repair. Following the Egan report, a new housing inspectorate will audit housing management in every local authority.
With the help of those reforms, we will be able not just to tackle homelessness, but to renovate 1.5 million homes in our country. To do so, we will now allocate, from capital receipts, £3.6 billion. Our commitment to the environment also recognises the need for responsibility in the use of energy, so there will be a new programme of home energy efficiency.
We are committed to a comprehensive programme of welfare reform. Since coming into office, we have introduced the new deal for the unemployed, the reform in finance for students, the working families tax credit and a new approach to child benefit. The Prime Minister has set up a welfare review which led to the welfare Green Paper, and a long-term framework for the provision of future pensions and for the reform of disability benefits will be announced later this year.
Last week we announced reforms in the Child Support Agency, and yesterday we announced new measures to combat social security fraud. The social security budget—which rose faster in the last Parliament—is set to rise by far less in this Parliament. The number of single parents on income support has fallen below 1 million for the first time in years as we have cut the bills of unemployment. Some 60,000 young people have already signed up for the new deal.
Today, I can announce further changes in welfare policy. The new deal for the unemployed is based on opportunities matched by responsibilities. It is now time to extend that approach to communities by tackling the underlying causes of their poverty. For our most deprived estates, the key problems are not just poor housing, but lack of employment and economic opportunity. In exchange for long-term targets for improving skills, educational qualifications and business start-ups in those areas, a total of £800 million will be allocated to a new deal to lift up our most deprived communities. A new deal helping the unemployed to become self-employed will be launched by the Prime Minister on Friday.
A further reform will make it possible for thousands more young people to stay on in school and to go on to further and higher education. We have to raise Britain's appallingly low staying-on rates, and a new educational maintenance allowance—linked to attendance and based on parental income—will be piloted for 16 to 18-year-olds. If, as we expect, the new maintenance allowance succeeds in encouraging more young people to stay on in education, we plan to introduce it nationally, using the money currently spent on post-16 child benefit.
As the interdepartmental review of children's services has uncovered, we spend £10 billion on young children, but we do so in an unco-ordinated and piecemeal way. Thousands of the youngest children—especially those under three—are missing out. Plans for a sure-start programme for the youngest children will be announced later this month, bringing together quality services for the under-threes and their parents—nursery, child care and playgroup provision, and post-natal and other health services. One new feature will be to extend to parents the offer of counselling and help as they prepare their children for learning and for school.
That is a significant step in the development of family policy for our country—supporting family life, encouraging stable families, and building on our national child care strategy. The Home Secretary's group will bring forward new recommendations on family policy soon.
At the heart of our review has been a determination that we fulfil our duty to the oldest members of our society. First, pensioners will benefit most from a better health service, but it has always been wrong that charges are levied on pensioners for the eyesight tests that they


regularly need to preserve sight and to protect against disease. From next April, eyesight test charges for pensioners will be abolished.
Secondly, elderly people who rely heavily on public transport need a fairer deal to enable them to be more mobile. In his transport White Paper, the Deputy Prime Minister will announce plans for nationwide help with transport for the elderly.
The elderly fear their winter fuel bills. As a result of the cut in VAT, our winter fuel payment and other changes, average pensioner fuel bills are up to £100 lower this year. Later this week, my right hon. Friend the Secretary of State for Social Security will announce our further plans for help with fuel bills for the rest of the Parliament. She will also announce further financial proposals to help pensioners who need help. Here, too, we are prepared to make reforms that will help alleviate poverty. From next April, every pensioner and pensioner couple will have a minimum income guarantee.
We shall also set a tax guarantee that no pensioner will pay income tax unless their income rises above a specified level. The Government will also announce measures to ensure that more people automatically receive the income they are due. As a result of the proposals, thousands of pensioners will be relieved from poverty. A total of £2.5 billion will be set aside for this important programme.
Further reforms in other services have made possible new investments that improve the quality of community life. As a result of cutting quangos and wasteful bureaucracy, and a new targeting of resources, £290 million extra will be invested in museums, the arts and sport during the next three years—not just repairing the damage of the previous Government's cuts, but a real increase of 5½ per cent., making possible improved access to museums and galleries in Britain.
As a result of asset sales in areas where spending is no longer needed, the Foreign Office budget will not only ensure more resources for the proper representation and promotion of Britain abroad, but my right hon. Friend the Foreign Secretary is announcing today that our support for the BBC World Service will be raised by a total of £44 million during the next three years. [HON. MEMBERS: "Hear, hear."]
For 20 years, overseas aid has been falling as a proportion of national income. Under our Government, it will now start to rise again. Because of a decision to sell a majority stake in the Commonwealth Development Corporation, raising substantial funds in so doing, and because of a new decision to target overseas development assistance on health, education and anti-poverty programmes, my right hon. Friend the Secretary of State for International Development will announce today that Britain will, during this Parliament, increase overseas aid from the low of 0.25 per cent. of national income—the Budget figure that we inherited—to 0.3 per cent. of national income.
Britain will enter the millennium at the forefront in pressing for debt reduction for the poorest countries, and aid, which was falling by 2 per cent. per year under the previous Government, will now rise in each of the next three years.
I come finally to the NHS. The NHS is compassion in action—what its founder Aneurin Bevan rightly called
the most civilised achievement of modern government.
The final conclusion of the comprehensive spending review is that it is fair and efficient to provide the best health service we can on the basis of need, not ability to pay, and under this Government health services will never be left to the hazards of private or charitable provision.
Yet half the beds in health service hospitals are in accommodation built before the first world war, three quarters of ward blocks are hand-me-downs from the days of charity, voluntary and municipal hospitals, and investment in the health service is long overdue. We also recognise the care, responsibility and dedication of doctors, nurses and all staff to NHS patients.
My right hon. Friend the Secretary of State for Health will announce on Thursday in the House targets that tackle inefficiencies in hospitals and cost overruns, simplify management structures and give a new emphasis to long-term planning. On quality, all hospitals will be required to publish league tables measuring the success rates of their treatments. During the lifetime of this Parliament, more than £1 billion will now be saved from red tape and put into patient care, in part by scrapping the costly and time-consuming internal market.
On the 50th anniversary of the NHS, the Government will make the biggest ever investment in its future, giving the health service for the first time for decades the long-term resources that it needs. Under the previous Government, the increase for the last three years was £7 billion. For the coming three years, I am announcing an increase in health service funding of £21 billion. [HON. MEMBERS: "Hear, hear."]
Health Department spending rose by an average of 2.5 per cent. a year during the last Parliament. Next year, it will rise by 5.7 per cent.; the year after that by 4.5 per cent.; for the rest of the Parliament, we will achieve yearly real growth averaging 4.7 per cent.
We shall meet our waiting list pledge, as we promised. Every hospital will benefit from the 50 per cent. increase in investment in equipment and buildings, and the £5 billion fund for national health service modernisation will give us the largest hospital building and modernisation programme that this country has seen. As it starts its next 50 years, the national health service is safe in this Government's hands.
The Government have made the choices necessary to deliver stable and sustainable public finances. We have been steadfast in the priorities that we set down, which are the nation's priorities. Now, as a result of our prudence and a commitment to investment in return for modernisation and reform, a total of £40 billion more can be invested in health and education—the nation's priorities. We are a Government whose prudence allows us to build modern public services to renew Britain; a Government who are keeping our promises to the people of Britain; a Government who are, line by line, delivering our manifesto commitments; and a Government who are, step by step, making Britain better and stronger. I commend the statement to the House.

Mr. Francis Maude: rose—[Interruption.]

Mr. Deputy Speaker (Mr. Michael J. Martin): Order. The House must come to order.

Mr. Maude: In the light of the press reports this morning, which include direct quotations from the


Chancellor's document, can the Chancellor say whether there was a single newspaper that did not receive a prior briefing? Which lobby firm does the House of Commons have to employ to get an early sight of Government documents? Once again, the Government have shown their brazen contempt for Parliament—[Interruption.]

Mr. Deputy Speaker: Order. It is no good if I have to be on my feet all the time calling the House to order, but that is what must happen if we are to have order. We must have order.

Mr. Maude: The Chancellor has confirmed today why Labour has already raised taxes 17 times, and why families are already £1,000 a year worse off under Labour. It is because Labour cannot control public spending, and because a Government without principles cannot take hard decisions and are pushed around by every crony in every spending lobby.
Does the Chancellor recall his promise that increased spending on priority services would be paid for by cuts in welfare? Does he recall who said:
as we get the welfare bills down…then we can release money into education and health"?
He may recall that it was the Prime Minister, in his pre-electoral phase. That is how Labour claimed that it would square the circle. That was the basis of the myth of the iron Chancellor.
But Labour failed. Today, the Prime Minister's spokesman said about that:
it was unrealistic that social security was going to be cut
until
other problems
had been solved.

Mr. Barry Gardiner: rose—

Mr. Deputy Speaker: Order. The hon. Gentleman must be seated.

Mr. Maude: Every one of Labour's welfare reforms has cost money, not saved it. That is why, despite what the Chancellor says, his figures show that social security spending, by the last year that is covered in the book, will be up by more than 20 per cent. in the course of this year. Does he recall warning the world of
the myth that the solution to every problem was increased spending"?
Does he recall the Prime Minister warning his European partners that
we will be fierce in containing public spending"?
That was the pre-election phase; what a deception it was. The Chancellor should now admit that, once the fiddled numbers are added back into state spending, it will increase over and above inflation by much more than 3 per cent. a year.
The Chancellor hopes that we will oppose his plans to spend more money on health and education, but I am going to disappoint him. Let there be no doubt that we

welcome extra money for those priority services. We, after all, always increased spending on those key areas, so that is not the difference.
The difference is that, although we increased spending on key services, we kept a tight rein on spending overall, and paid for that increase honestly, because we were running a strong economy that could support increases. Under Labour, the economy is already faltering, and because the Chancellor has failed to reform welfare, he is paying for the increases in spending by raising taxes. So far, the British taxpayer has paid only the down payment. He is reordering spending all right—from the taxpayer to the state.
The Government have abandoned our programme of public service reforms, so the extra money for priority services simply will not go as far as it should. By loading extra costs on to the health service, the bottom line will be simple: there will be more money on overheads and less money on patients. Will the Chancellor tell the House how much of the extra money on health will be spent simply on pensioners who have been forced off health insurance by his vindictive attack?
How much of the extra money on education will be spent on pupils who have been forced off the assisted places scheme? Will the Chancellor admit that his spending on education at the end of four years will be only 0.1 per cent. of national income more than we delivered, and that the plans that he has published today bear little relation to those in his March Budget Red Book? Does he remember saying, only three months ago:
By 2000, the Budget is forecast to be in balance"?—[Official Report, 17 March 1998; Vol. 308, c. 1099.]
He now plans no Budget balance or surplus, even in a single year; no repayment of national debt—not a single penny will be repaid; no reduction in the proportion of national income—[Interruption.] Labour Members clearly do not believe the numbers in the Chancellor's own book, which show that this Budget does not even get into balance in a single year.
Furthermore, the right hon. Gentleman plans no reduction in the proportion of national income spent by the state; instead, there will be an increase in every single year. We now face permanent budget deficits, the national debt increasing all the time and all over again, and the state spending ever more. In the few months since March, the three central pillars of the myth of the iron Chancellor have rusted away.
Will the Chancellor acknowledge that all his plans are based on assumptions in respect of growth, inflation and unemployment that are far more optimistic than those of most independent economists? Does he realise that those plans—which already represent a huge expansion of the public sector—are dangerously vulnerable to an economic downturn to which his own policies have contributed? Does he really think that now is the time to launch a grand plan for ever more state spending?
Will the Chancellor confirm that only half of public spending will be subject to his three-year plans, and that the remainder is demand-led? Does not his decision to abandon cash limits mean that, the faster inflation grows, the faster spending will grow? The more spending grows, the higher interest rates will have to stay, as members of the Monetary Policy Committee have said. How seriously does he expect the House to take his threats on public sector pay when The Daily Telegraph is briefed to carry


the headline "Public Sector Workers Face Pay Squeeze" and The Guardian says that the Government will announce
extra pay for existing doctors, nurses and teachers"?
How seriously does he expect to be taken? Does he really believe that people cannot read two newspapers and compare the spin given to each? Does he accept that the so-called new obligations for the review bodies are exactly what those bodies already have?
New Labour's claim to have found a third way was based on saving money on welfare to move it into health and education. The Chancellor said so in terms last year. He said:
We will ensure that our central aim of shifting resources from welfare to education is met through reform of the welfare state.
On his own test, the Chancellor has failed, and failed comprehensively. Will he confirm that every single welfare reform that he has introduced has cost money, not saved it—has increased dependency, not reduced it? Will he confirm that, as his press office said last week, the £5 billion a year cost of working families tax credit is being fiddled out of the public spending figures altogether? Will he confirm that the Office of National Statistics has contradicted him, and said that it will classify WFTC as a benefit in the national accounts?
Has the Chancellor not fiddled a further £1 billion a year for welfare to work out of benefit spending to massage down his spending figures, and to enable him to say what he has said? Are these not exactly the sort of accounting dodges that we last saw from the Paymaster General's old crony Robert Maxwell? More fiddles, more fudge—all intended to hide the real impact of the Chancellor's plans.
The Chancellor boasts about his intention to tackle benefit fraud. Unlike Labour in opposition, we support genuine efforts to tackle fraud; but how is the Chancellor going to do it? Where does he get his figure of £7 billion? Does he recall that, in March, Ministers were saying that there was £4 billion of fraud? What has he done in the meantime to almost double that figure? Does he agree that such loopholes are an "Alice in Wonderland" fantasy, and that the entirety of the Government's plans now rest on them? Those were the words used by his right hon. Friend the Prime Minister 18 months ago, when the Conservative Government planned to save just £2 billion a year. What has changed in the meantime? Why is there suddenly a cornucopia?
While we welcome extra money going to the pensioners who are in the greatest need, is the Chancellor not creating a two-tier system? Those who have provided for themselves will be penalised: they will not receive a penny of the increase. Is this not the beginning of a means-tested basic state pension? Will not the new scheme discriminate against middle Britain—people who work hard and save hard all their lives, and try to be independent of the state?
The Chancellor talks about his "golden rule". Does he agree with Professor Buiter, a member of his own Monetary Policy Committee, who said that the golden rule on which he places so much importance had
no merit as a guide to optimal Government borrowing"?
In his desperate efforts to cover up his tax and spending rises, is not the Chancellor playing fast and loose with the public accounts? There is a new list of redefinitions: PSNB, PSNCR, CGNCR, TME, DEL, AME. New Labour, new definitions.
Is not the simple truth that new Labour has failed to get a grip on public spending, and has had to fall back on tax rises? The typical family is already paying £1,000 a year more under Labour. The reality is that further big tax rises or a huge growth in borrowing must lie ahead. Labour learned when it was last in government that we cannot spend our way out of recession; today, the Chancellor risks spending us into recession.
The economy is already heading down through easily avoidable errors. Manufacturing is already in recession, there have been six interest rate rises and 17 tax rises, and unemployment is already increasing. Now, the Chancellor's comprehensive failure in regard to public finance is being disguised through a series of accounting fiddles and deceptions. This is a fiscal strategy hatched by the Chancellor and his cronies in the Paymaster General's penthouse flat. Last year we had the Robert Maxwell memorial Budget, with its vicious raid on pension funds. This year, the Government have moved on: this year, it is Robert Maxwell accounting.
This is not a comprehensive spending review; it is a comprehensive spending failure.

Mr. Brown: I shall answer every one of the detailed questions of the right hon. Member for Horsham (Mr. Maude). It became absolutely clear during the exchanges that he does not believe in delivering public services, as we want to do. It also became absolutely clear—without him saying which services he would cut—that the Conservative party would plan a massive cut in public services.
The right hon. Gentleman says that he would exempt health and education. Given that he wants to spend more on defence, that the Opposition home affairs spokesman wants to spend more on law and order, that our rate of growth in social security spending is around half what it was under the Conservative Government, that the right hon. Gentleman has no proposals for reducing social security expenditure, and that half the extra allocation will go to health and education, he cannot escape the fact that his proposals would mean cuts in hospitals, cuts in the health service, cuts in education and cuts in schools.
The right hon. Gentleman has set his face against the public services that this country needs, so from now until the next election the Conservative party will have to explain to each constituency which hospital it would starve of funds, which school it would starve of funds and what it would do to the education and health services of this country.
Let me deal with the right hon. Gentleman's points one by one. Let us be absolutely clear about social security spending. The right hon. Gentleman talks as if he were the reformer on social security spending, but welfare spending rose by 3.8 per cent. a year under his Government, whereas it will rise by 2 per cent. a year in this Parliament, even taking into account the working families tax credit.
If the right hon. Gentleman supports reform, why does he not support our proposals on student finance, which will give half a million students places in universities and colleges? Why does he refuse to support our working families tax credit? Why does he refuse to support the new deal? Why did the Conservative party refuse to support the windfall tax that made possible the new deal?
We will not take any lectures on prudence from a shadow Minister who was at the Treasury between 1990 and 1992, when interest rates were 15 per cent., inflation was 10 per cent., borrowing was rising to £50 billion—its highest ever level—and imprudence was the policy being pursued by the Conservative Government.
As for our figures on public spending, why does not the right hon. Gentleman acknowledge that we are reducing debt as a share of national income from 45 per cent. under the previous Government to less than 40 per cent. under the present Government? Why does he not acknowledge that current spending—which under the Conservatives grew by 1.5 per cent. a year, or £12 billion—is to be in balance under the present Government? Why does not he acknowledge the fact that we have been prudent and cautious by being prepared to sell off assets that we do not need, to set efficiency standards and rigorously to select priorities—which the previous Government never did—so that we can get money for health and education?
As I was listening to the shadow Chancellor, I thought that I should like to see the deputy leader of the Conservative party back in his former position, and then I thought of the former Chancellor. The Conservative party had 18 years of failed government, and they will have 18 more years of failed opposition.

Mr. Malcolm Bruce: I welcome the Chancellor's statement. Like him, to some extent I welcome the shadow Chancellor's remarks, because they clearly showed that the Conservative party is wedded to third-rate public services. The right hon. Member for Horsham (Mr. Maude) had apparently not read the statement, because spending over the whole Parliament adds up to less than spending in the last Parliament, so it is hardly profligate.
I also welcome the fact that the Chancellor has now acknowledged that he has a war chest, and that he is putting some of it to good use, especially in health and education. I welcome the action on top-up on pensions, and on health checks. I hope that he will acknowledge that those are two good Liberal Democrat policies, and we are happy to share them with him.
Why have we had to wait so long for this crucial investment in education and health, given that class sizes and waiting lists have continued to rocket? Little is so comprehensive in this review that it could not have been announced a considerable time ago. Does the Chancellor accept that he runs the danger of creating boom-bust in the public services just as he squeezes it out of the economy?
More money for public services—which we have been calling for—over the next three years is welcome.
Does the Chancellor agree that, viewed over the whole Parliament rather than the next three years—he conspicuously missed two years in all his comparisons—the figures are not quite so impressive? Compared with the first five years that the right hon. Member for Huntingdon (Mr. Major) was Prime Minister, health spending in the life of this Parliament will rise in real terms by about 3.7 per cent. a year compared with 4.1 per cent. in the previous Parliament.
Does the Chancellor further agree that, in Scotland, the comparison is much worse, at 0.6 per cent. a year during this Parliament compared with 4.7 per cent. during

the first five years under the previous Prime Minister? That means that, by 2001, the Scottish Office budget will be lower in real terms than it was in 1994–95.
Today's settlement has been advertised as a bonanza, but comparing the Prime Minister's record against the dismal record of the previous Prime Minister suggests that, overall, in health and in many other areas, the settlement is not Major-plus but Major-minus. What happens if inflation is higher than expected, as many commentators say it will be? What overshoot in inflation would have to occur before the Chancellor provided compensation for those budgets? A 1 per cent. overshoot in inflation would wipe £5 billion from health and education funding. In view of that risk, why is the departmental reserve a mere £1.4 billion?
What happened to consultation? Why has there been no consultation on £900 billion of public spending? Why has the House not had a chance to debate in advance the priorities that should be considered, and why is the system so centralised by the Chancellor, with capital spending controlled by the Treasury and performance contracts with the Treasury? Surely Ministers should be accountable to Parliament.
The problem for many people is that, by waiting two years, the Government have acted too late. Those people have suffered the squeeze. Instead of getting the better public services they were promised, they have got worse services during the first two years of Labour, and they will now have to wait to see whether things get better.
I congratulate the Chancellor on putting the emphasis on health and education. I welcome that unreservedly. We and the British people will judge the Government over the whole Parliament, not on big numbers in one day's headlines. We shall judge them on whether they deliver a genuine, palpable and significant improvement in the quality of public services. I hope that the Chancellor will accept that that is the basis on which the Government should be judged.

Mr. Brown: I suppose I should say that I am grateful to the hon. Member for Gordon (Mr. Bruce) for his limited congratulations. As it is the first time that he has managed to do that in this Parliament, I should thank him for it.
The hon. Gentleman asked why we waited before taking today's action. We did that for the very reason he mentioned, that we must get stop-go out of the system and create stability in the management of both public finances and the national economy. The person who reminded us of that was the hon. Gentleman's leader, the right hon. Member for Yeovil (Mr. Ashdown), who said in the debate on the Queen's speech:
If we tighten our belts now, we have a real opportunity to get to grips with the huge hangover of debt left behind by the Conservatives."—[Official Report, 14 May 1997; Vol. 294, c. 74.]
It is strange that, since the right hon. Gentleman said that a year ago, he has been demanding more and more instead of facing up to the need to deal with debt.
The hon. Member for Gordon asked about spending. I would simply have thanked him for his congratulations had he not said that it was not enough. The Conservatives say that it is far too much, and the Liberal Democrats say that it is not enough. In the general election the hon. Gentleman asked for £1.9 billion extra a year to be spent on education. That is just slightly less than £6 billion over the next three years. We are spending not £6 billion


but £19 billion. Why did the hon. Gentleman not start by welcoming that? He said that we should spend £500 million a year extra on the health service and engage in some capital spending. That is £2.5 billion over a Parliament. We are spending £21 billion in three years.
Is it not about time that the Liberal Democrats, instead of finding every excuse for more and more spending and more and more taxes, welcomed the Government's progress in the development of public services? The figures for Scotland, England and Wales show that health spending is rising by 4.7 per cent. and education spending is rising by 5.1 per cent. a year. That is far more than any Liberal Democrat candidate ever asked for, and it is about time that the party recognised that the Government can combine the prudence that it has never shown with the ability to deliver proper public services.

Mr. Kenneth Clarke: Is the right hon. Gentleman content for me to regard today's statement as his transformation from the iron Chancellor, with two years of control of public spending, to the big-handed Chancellor, with three years of uncontrolled spending on health, education and just about every other Department in Whitehall, with no significant savings in any part? Can he persuade me that this transformation to a new, happy Chancellor is planned and prudent, rather than forced upon him?
Does the right hon. Gentleman accept that the figures for growth of total public spending at 2.75 per cent. real in each of the next three years are far above the figures that he planned as recently as his last Budget? Has he not noticed that this U-turn takes place at a time when interest rates are too high, the economy is slowing down too fast, unemployment is about to go up again, and his tax revenue forecasts will fall short? Will he not end this Parliament short of taxation and short of economic growth? Will he tell the cheering ranks of old Labour behind him that they may ring the bells today, but they will wring their hands hereafter?

Mr. Brown: From the Chancellor who gave us the 17 tax rises, from the Chancellor who refused to take the action necessary to raise interest rates before the general election in order to tackle inflation—[Interruption.] As for the right hon. and learned Gentleman's predictions today, let him recall what he said in January 1997, when we said that we would keep within a two-year spending ceiling. He said:
Hell will freeze over before Gordon Brown could control the spending.
We took the action—[Interruption.]

Mr. Deputy Speaker: Order. We must have good order.

Mr. Brown: We took the action necessary, controlling spending. We reduced borrowing by £20 billion. We have current account surpluses for the next three years. We are meeting a golden rule that means that taxation must pay for current spending. We have a sustainable investment rule that gets debt down below 40 per cent. of GDP. We have achieved more in our planning in a year than the right hon. and learned Member for Rushcliffe (Mr. Clarke) did in all the time that he was Chancellor.
The Conservatives should now face the fact that they were responsible for the inflation that has entered the system, and that we have had to deal with it. They had

better tell us whether they support the independence of the Bank of England. Do they support the action that was taken on interest rates? Do they want interest rates higher or lower? Do they want public spending to be higher, the same, or lower? The Conservative party seems to be setting its face against the good modern public services that this country needs.

Mr. Giles Radice: As the Chancellor knows, the Treasury Select Committee will question him on the statement tomorrow. Does my right hon. Friend accept that the plans that he announced today combine fiscal prudence with a much welcome long-term commitment to spending, especially on health and education? Does he agree that the achievement of the objectives that he has announced today depends in part on the performance of Government Departments, as he said, but also on the performance of the economy?

Mr. Brown: I am grateful to my hon. Friend. This is indeed a tough settlement, because it combines investment with the need for reform. I am grateful to him for drawing attention to the fact that each Department now has targets for the services that it must deliver, and stages by which those targets must be met, and that there is a process of scrutiny and audit that will have to be followed.
My hon. Friend rightly says that we have put money into the vital public services. Education was growing by 1.4 per cent. a year for the past 18 years, and 1.4 per cent. a year in the last Parliament. It will now grow by 5 per cent. a year, on average. Health service spending was growing by 2.5 per cent. a year in the last Parliament. It will now grow by twice that much—4.7 per cent. a year. We have managed to invest in the vital public services in which the country takes pride, while getting debt below 40 per cent., as we will do, getting a current surplus over the next three years, as we plan to do, and at the same time reducing borrowing from £27 billion to £8 billion over the last year. The ability to combine prudence with public services of a high standard is something that the previous Government could never achieve. It is the mark of a new Labour Government.

Sir Peter Tapsell: Those who remember the other Mr. Brown, George Brown, who introduced the previous Labour national plan with a similar degree of naive bombast, will also recall that it all ended in tears, heavily laced with whisky. The Chancellor has no idea what the main economic indicators will be showing in three years' time, but he is offering jam to everybody in the run-up to the next general election three years ahead of it. Whatever we do not know about the future for Britain, we can be certain of one thing about the future experience of the Chancellor, and it can be summed up in three words—education, education, education.

Mr. Brown: Exactly—education, education, education. We are giving £19 billion to education, and the Conservatives should be welcoming that today. On the economy, we have taken the most prudent and cautious forecast. We are running current surpluses over the next three years. We can spend on health and education in the way that the country wants us to and in the way that the economy and society needs us to, because we have been prepared to make the tough choices which reallocate money from less high priorities to our priority services.
I should have thought that the old Conservative party would welcome that. The Conservative party will be fighting the next election on cuts in expenditure on health and education. There has been a lurch to the right in the Conservative party, and it will pay a further penalty at the next election.

Mr. Dennis Skinner: Is my right hon. Friend aware that, when I was listening to the responses to his statement, it became pretty clear that those on the Tory Front Bench were concerned about the briefing for this momentous statement, the Liberal Democrat spokesman was concerned because it came a little too late, and the ex-Chancellor of the Exchequer gave me the impression that he had created the situation anyway? All in all, it seems that they are all engaging in what is called belly-warming talk.
May I ask my right hon. Friend something that matters to the people in the coalfields and in the areas where manufacturing industry suffered massive losses during the 18 years of Tory Government? Is there anything that he can say in respect of the 80 recommendations of the coalfield communities task force? It has made recommendations about repairing the social fabric in areas that have suffered mass unemployment and where unemployment is still running at over 20 per cent. Will there be any money allocated for those specific proposals that we dealt with yesterday?

Mr. Brown: I am grateful to my hon. Friend. It is precisely because of the problems in established communities that are facing unemployment and big transformations that we are introducing the new deal for communities. In the past, regeneration and other programmes have been based on the idea that, although the problems could not be solved, the consequences would be tackled, and not the causes.
We are trying to get new industry and business into the difficult and hard-hit areas. We are trying to raise the level of education and skills and trying to give adults new opportunities for jobs that they have not had for years. That is what lies behind the new deal for the communities.
It will be of particular interest in the coalfield communities about which, as my hon. Friend knows, my right hon. Friend the Deputy Prime Minister made a statement yesterday. He welcomed the 80 recommendations of the coalfield communities task force, and said that he would be acting on many of them as time proceeds. The new deal for communities means investing £800 million in rebuilding the social and economic infrastructure of those areas, and getting jobs and opportunities to people let down by the previous Government.

Mr. John D. Taylor: The Chancellor of the Exchequer is to be congratulated on his statement, particularly the concentration on education, health and transport. I hope that, at the end of the day, there are funds to cover all the proposed public expenditure. At a quick glance, one notices that the increase in spending in Scotland and Wales over the next three years will be 16 per cent., whereas for Northern Ireland it will be 11 per cent. One will have to look at the details to establish the reasons for that disparity.
May I ask the Chancellor one simple question? In preparation of the public spending review, what consultations—either informal or formal—were there with the central European bank?

Mr. Brown: I am grateful to the right hon. Gentleman. I was pleased to be able to visit Northern Ireland before the referendum and to say that the Government will introduce a number of proposals for improving Northern Ireland's economy and transport infrastructure. I think that he will welcome the fact that we have reduced corporation tax, given reliefs to a number of small businesses, and taken major decisions on improving the Province's airport, railway, bus and other transport services. We are also spending far more in Northern Ireland than in other parts of the country on the new deal for young people, to get young people back to work.
Spending is based on the Barnett formula, which has been accepted for many years by hon. Members on both sides of the House. Allocations have been made on that basis, and it is for the Secretary of State for Wales, the Secretary of State for Northern Ireland and the Secretary of State for Scotland to decide allocations within their Budget. Today or in future days, they too will make an announcement on their Budget priorities. We have given a fair settlement to all parts of the United Kingdom. I thought that that should be welcomed on both sides of the House.

Mr. Andrew F. Bennett: Will the Chancellor tell us exactly what will happen to social housing? It seemed to be very good in the statement that there would be extra money for renovation and modernisation of housing stock. However, does he accept that poor housing can lead to poor health, and that poor housing makes it extremely difficult for young people to learn? Is it not very important that, if there is not—as I think—any extra money for social housing in the next three years, we should find new and imaginative ways of getting that type of social housing built?

Mr. Brown: And it is exactly what we are doing. I am grateful to my hon. Friend for allowing me to amplify on my earlier comments. The fact is that £3.6 billion from capital receipts will be invested in building and repairing existing council housing—allowing 1.5 million homes to be refurbished, and reducing the repair backlog by at least 250,000. There will also be a new housing inspectorate, as part of the best value regime, that will have real power to tackle poor management in any part of the country.
My hon. Friend also asked for new and imaginative programmes. The new deal for the communities is exactly that. It will combine action on housing with action on employment, which is what is desperately needed in most areas.
There will be over £100 million to reduce rough sleeping. Our commitment to the homeless people of this country will be met. I visited one foyer, in Slough, which had just been opened. There are now 70 foyers round the country. We want to help young people to have both the housing and the employment opportunities that will give them the future they need. Today's announcement is about a programme for new investment—with reform—in housing, particularly for those who are in the greatest difficulty.

Sir Michael Spicer: How can it possibly be prudent to raise public expenditure totals


above the Chancellor's own forecasts for GDP rates over the next few years without saying whether it will be paid for out of higher taxes or higher public borrowing?

Mr. Brown: The hon. Gentleman should have been in the House a few weeks ago, when I explained exactly how our proposals would be financed. We have created—by the two new fiscal rules that we have adopted—a public spending control regime and financial discipline that gives us both a current Budget balance over the economic cycle and a reduced level of debt to GDP. As I said earlier today, other Governments have tried in past years to achieve a balance in the current Budget and a sustainable debt level, but have failed to do so. The previous Government had a 1.5 per cent. deficit on current spending—equivalent to a £12 billion deficit every year—but we will have a balance.

Sir Michael Spicer: Answer the question.

Mr. Brown: I am answering the question.
The hon. Gentleman's idea that that is somehow not prudent is answered by the two rules that we are applying, and by our ability to get debt below 40 per cent. and to run a current Budget balance. That is how we are being prudent. We have been able to get so much money to health and education by reallocating resources within the moneys that are available to us. We kept to our promises, and we kept within the tight ceilings we set for our first two years. We reduced borrowing by £20 billion. I should have thought that the hon. Gentleman would give us credit for that.
The fiscal tightening that we have achieved this year will be achieved next year as well. This is a prudent settlement, but one based on good public services. It is only the Conservative party that believes that prudence means having to cut public services and public investment. We have shown that one can have both prudence and investment in the priority public services.

Mrs. Anne Campbell: Does my right hon. Friend accept that, for most parents, education is an absolutely top priority, and that his statement will be met with great delight by many of our constituents? Does he agree that classes of approaching 40 pupils are simply unacceptable? Will he ensure that the money is spent in such a way that the less well funded authorities are brought much closer to the better-funded authorities, and that county councils, especially those that are Conservative-controlled, are persuaded to use the money as it is intended—for education?

Mr. Brown: I entirely agree with my hon. Friend. The money has been allocated for education, and Conservative-controlled local authorities should honour what the people of this country want and invest the money in education. I also agree that we must get class sizes for five, six and seven-year-olds down, and the money that we have invested will enable us to do so.
My hon. Friend will be interested to know that my right hon. Friend the Secretary of State for Education and Employment will be making a statement to the House tomorrow. He will outline targets and the stages by which they will be met. Representing the constituency she does, my hon. Friend will be delighted to know that the

investment in science laboratories in our universities and colleges—more investment in education—is at a level that has never before been seen in this country, as a result of the new public-private partnerships that we are announcing. We are investing in education, schools and universities and in research. That is an important commitment to the future of this country.

Mr. Dafydd Wigley: When the froth and hype have settled, is not the truth to be found on page 109 of the White Paper? It shows a standstill expenditure budget through to April 2000, that in real terms the expenditure for 1999–2000 is lower than the average for 1994–96, and that the Welsh Office budget for 1999–2000, at £6.7 billion, will in real terms be the same as it was back in 1994–95? In a week that the Government published a paper for Wales showing that 250,000 people are looking for jobs, surely we need economic stimulation now, not jam tomorrow, in three years' time.

Mr. Brown: If the right hon. Gentleman is concerned, as I know he is, about unemployment, he should not only support the new deal for young people and the long-term unemployed but welcome the fact that we are today announcing a new deal for communities. Far from the facts about expenditure in Wales being as he is trying to present them to the House, the average annual real spending increase will be 2.6 per cent.—£2.2 billion extra over the next three years. That meets our commitment to Wales on education and health, which is one reason that the Labour Government are so popular with the people of Wales.

Mr. Dale Campbell-Savours: This evening, many people in further and higher education across the country will be very happy with the £1.1 billion extra that is to go into the science budget, and with the extra 500,000—half a million—new places to be found in further and higher education. Do not the new commitments from the Labour Government require a new impetus from Cumbria county council to bring forward the project for the university of the lakes, a project that is greatly required in the county of Cumbria? In Cumbria, we must be at the forefront in taking our share of the vast amount of new money being brought on stream.

Mr. Brown: I am grateful to my hon. Friend, who has always been greatly interested in education, especially in the future of higher and further education. My right hon. Friend the Secretary of State for Education and Employment will listen with interest to his comments about the university of the lakes.
It is because we have taken the difficult decisions about student finance that we are able to say that there will be at least half a million more students in higher and further education by the end of this Parliament. That means that half a million people who were denied the opportunity to develop their talents and fulfil their potential because of the cap that the Conservatives put on entry into higher education will now have that opportunity.
As for science, under the Conservative Government, public-private partnerships were replacing public funds with private funds. We have shown today that it is possible to add to public investment with substantial private investment. Instead of £700 million being spent on science, £1.1 billion will be spent as a result of investment by the Wellcome Foundation.
These public-private partnerships, which enhance public investment in science, also make for the renewal of our science infrastructure and building for the future, in terms of the jobs that will be created and the strengthening of the economy. I hope that all hon. Members welcome what we are doing for science.

Mr. Howard Flight: With creative accounting, anyone can paint a picture that appears to meet all objectives. The Chancellor constantly chants the mantra of prudence, but what does he have to say about what is going on in Japan and Asia? I have been a Member of Parliament for a little over a year, and in that time I have been amazed never to hear anything from the Chancellor about the impact on our economy of the major contracting problems in other parts of the world.
I come now to the crucial point in what the Chancellor said today. If, as I fear, British economic growth and tax revenues are substantially lower than he assumes in his forecast, will his three-year spending plan hold? Will it be financed from higher borrowing or higher taxation, or will this wonderful three-year plan be revised dramatically in 18 months' time?

Mr. Brown: I am grateful to the hon. Gentleman, but I have to tell him that I am making a public spending announcement for Britain, not the rest of the world. As for Japan, we have always said that there had to be reform of the financial system as well as reform of taxation. That remains as true today as it was a few months ago.
On public spending, I have already said that we have taken the most cautious estimate of the state of the economy. We have also been able to announce surpluses over the next three years, which is, of course, very important. However, when the hon. Gentleman examines the figures, he will notice that the main reason that we can spend on and invest in health and education is that we are committed to the health and education services, and have been prepared to make the choices necessary to reallocate resources to them. It is about time that the Conservative party acknowledged that the previous Government failed in those respects, but that we are being successful.

Mr. Barry Jones: With regard to the massive sums that he is pumping into housing, school and hospital services, will my right hon. Friend say what ruthless and determined action he is going to take to make sure that every pound of those billions goes to front-line services, and is not wasted by careless health, local education and housing authorities?

Mr. Brown: Before the Conservatives came to power, the national health service used to be the most cheaply and efficiently administered system, with only 7 per cent. of health service expenditure being spent on administration. Under the Conservatives, that rose to 12 per cent. of expenditure because of the bureaucracy. That is why my right hon. Friend the Secretary of State for Health will announce on Thursday that he is going to save £1 billion on bureaucracy, which will go to front-line patient care.
As for the record of the Conservative party on the health service, there were increases of 2.5 per cent. in the last Parliament, whereas we are proposing increases

of 4.7 per cent. for the next three years. On Thursday, my right hon. Friend the Secretary of State for Health will announce the targets that will have to be met, the standards that will have to be achieved, and the inefficiencies in some hospitals that will have to be rectified.
It is because we are committed to the NHS, and because we believe that every pound of public money should be well spent, that we are capable, in a way that the previous Government were not, of securing value for money for every patient in the health service.

Mr. John Swinney: Will the Chancellor confirm that the base that he is assuming for this afternoon's announcement is the dreadful base that he inherited from the Conservatives, which he has prolonged for two years, and that any increase in public expenditure would be welcome alongside that starting point? Will he also confirm that, even with the increase in resources announced today, the Scottish Parliament will still have fewer resources at its disposal in 2000 when it opens than it had when one of the many discredited Conservatives was Secretary of State for Scotland in 1994? Finally, does he think it prudent that, at a time of high interest rates in the United Kingdom economy, the Secretary of State for Scotland will announce this afternoon cutting support to enterprise by £50 million in real terms?

Mr. Brown: The first to be worried about the policies of the hon. Gentleman's party are every business in Scotland for whom those policies would mean tax rises of about £1,500 a year. As for public spending in Scotland, the hon. Gentleman should welcome the fact that this afternoon my right hon. Friend the Secretary of State for Scotland will announce that, by 2002, all three-year-olds in Scotland will have the right to a nursery place. That achievement by a Labour Government could never be achieved by the Scottish National party.
The hon. Gentleman should congratulate us on the fact that, by 2002, there will be 5,000 new classroom assistants in Scottish primary schools. Once again we are improving the standard of education in our schools. We do not base our decisions on the economics of the SNP. We base them on the economics of the real world, and that is why we get money into health and education.

Mr. Jeremy Corbyn: May I take my right hon. Friend back to the subject of public sector housing and his response to my hon. Friend the Member for Stockport (Ms Coffey)? In his statement, he outlines welcome money for the improvement of existing stock and dealing with the huge backlog of repairs that was bequeathed to us by the outgoing Tory Government. However, he must recognise that, in inner-urban Britain, unless young people and poor people can be provided with council or housing association properties, they have no choice but to live in very expensive private rented accommodation that is paid for by housing benefit.
Does my. right hon. Friend recognise that we now need to invest massively in a house building programme that will improve the lot of the poorest people in inner-urban Britain and save money on health and education? Children are under-achieving, and people are occupying hospital beds because they live in such filthy accommodation.

Mr. Brown: First, my hon. Friend should welcome the new deal for young people, as it gives the people


he mentioned the chance to get jobs. It provides responsibility matched by opportunity, but it is the way forward. I am pleased that 60,000 young people are now part of the new deal and participating in the programme. That is why we are extending the new deal to the long-term unemployed. We are making it possible for single parents to get jobs if they want them, and many disabled men and women who want to work will also have opportunities to do so.
Secondly, my hon. Friend should welcome the fact that we are investing in innovative housing reforms that will enable young people, particularly those living in the difficult conditions he mentioned, to match the jobs and the training that they are getting with the housing that is available. Thirdly, he should welcome the fact that 1.5 million houses will be improved as a result of the £1 billion plus investment from council tax receipts in new housing.
It is a programme for employment opportunity, rebuilding communities that have been hard hit, and improving the housing stock. In particular, we are determined to help the young homeless who were left behind under the previous Government.

Mr. Edward Leigh: Page 87 of the White Paper on social security tells us that benefit expenditure is to increase from £95 billion in this financial year to £108 billion in the financial year of the next general election. In the light of those figures, will the Chancellor confirm that, when the Prime Minister said before the general election, "I vow that we will have reduced the proportion we spend on the welfare bills of social failure," he meant to say, "I vow that, with a little bit of luck, and with massaging the figures, we might stop welfare bills increasing quite as fast as they used to"?

Mr. Brown: The hon. Gentleman should look in detail at what the Government are doing. First, we are cutting the bills of failure by getting young people into work—60,000 are participating in the new deal. The number of lone parents claiming income support has fallen below 1 million. In the past year, about 40,000 have come off benefit and into work, compared with 50,000 who were joining benefit under the previous Government. So the hon. Gentleman should applaud the fact that we are reducing the bills of unemployment and getting people back into work.
The hon. Gentleman should also be aware of the saving to the taxpayer of about £40 a week by people moving even from income support into family credit. The working families tax credit mean that the people concerned are about £40 a week better off. So we are making the transition, and he should applaud us for that. Despite everything that he and most of his party think, social security expenditure rose by 3.8 per cent. under the previous Conservative Administration in the last Parliament. Even taking account of the working families tax credit, it is rising by 2 per cent. in this Parliament.
The hon. Gentleman should applaud us for reducing the rate of growth of social security spending and putting in money that will enable people to get back to work and contribute to the community. We are meeting the election promise that he read out.

Mr. Tam Dalyell: On the question of debt relief for the poorest countries in chapter 16.8, what can

my right hon. Friend say about the heavily indebted poor countries initiative? What certainties can we give those countries over the next three years?

Mr. Brown: I am grateful to my hon. Friend. In addition to what we are doing on overseas aid in respect of direct Government assistance to the poorest countries in the world rising as a proportion of national income and the development aid budget rising every year when it used to fall, which I know my hon. Friend will welcome, we are contributing to debt relief.
When we took office, very few countries were part of the heavily indebted poor countries initiative. Since the G7 meeting, the Commonwealth Finance Ministers' conference and the Mauritius mandate that we launched, several countries have moved into the debt reduction process. The latest is Mozambique, which was paying an astonishing 9 per cent. of its national income in debt repayments, while investing only 4 per cent. in education and health. Along with other countries, through a grant as well as through getting debt relief off the ground in the Paris club, we have made it possible for the heavily indebted poor countries initiative to extend to Mozambique.
Our new task is to move on to other countries that we can help. I am particularly interested in post-conflict countries such as Rwanda and Liberia that do not have the wherewithal to rebuild their economies and are burdened by unsustainable debt. It is now time for new initiatives to be launched, and I know that my hon. Friend will want to help and support us in those efforts.

Mr. Quentin Davies: Neither the House nor the public will have missed the fact that, although the Chancellor undertook to answer "in detail", to use his words, the questions he was asked by my right hon. Friend the shadow Chancellor, he did not answer or address a single one of them. He just went off on his usual rant, and then sat down.
Will the right hon. Gentleman give a straightforward answer to the straightforward question from my hon. Friend the Member for Gainsborough (Mr. Leigh)? Is it not a fact that he has now definitively abandoned his commitment to reduce social security spending as a share of national income? It is quite obvious from his own figures that that is the case. Why does he not have the courage and straightforwardness just to admit it?

Mr. Brown: I actually have the figures. Social security spending as a proportion of national income, which we inherited at around 12 per cent., is falling to 11 per cent. However, under the previous Government, in the last Parliament it rose by 3.8 per cent., and it is rising by only 2 per cent. under us.
The hon. Gentleman must distinguish between the costs of failure that we are definitely reducing with the new deal and other measures, and what is entirely right support for poor pensioners as part of the social security budget and child benefit. He should support us in easing poverty among pensioners. I for one am not prepared to continue with the situation that existed under the previous Government, when thousands of poor pensioners were left without hope of getting anything more to take them out


of poverty. We shall take the necessary action, and he should support us in that. As for cutting the bills of failure, that is exactly what we are doing.

Mr. Jim Cousins: My right hon. Friend's statement has more than lived up to its trailers. When we consider future investment incentives, how to share out the money to rebuild smashed city neighbourhoods after so many years of neglect, how to meet health needs and raise educational standards, can he assure me that the needs of my own north-east region will be met in precisely the same way as the needs of Scotland and Wales—need for need, head for head and pound for pound, with fairness and without favours?

Mr. Brown: It is because of what my hon. Friend says that we are giving young people in every part of the United Kingdom the right to training or work after six months of unemployment. Every person in every part of the country who has been unemployed for more than two years will receive help worth £75 a week to get a job. The Government agree with my hon. Friend that there should be a needs-based approach. That is why the measures for single parents and for the disabled apply to the whole United Kingdom.
I hope that my hon. Friend will involve himself in shaping the new deal for communities in Newcastle. We wish that we had had the chance years ago to tackle not just the consequences of poverty, but the real causes. We must do that together.

Several hon. Members: rose—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. We must now move on. There is much else to be done, and I have to protect the remaining business of the House. I point out to hon. Members that, as the Chancellor has said, there will be several statements in the next few days, when there will be opportunities for further questions.

BILL PRESENTED

PARLIAMENTARY REFORM BILL

Mr. Tony Benn, supported by Ms Diane Abbott, Mr. Jeremy Corbyn, Mr. John Cryer, Mr. Cynog Dafis, Alice Mahon, Mr. John McAllion, Mr. John McDonnell, Mr. Andrew Mackinlay, Mr. Richard Shepherd and Mr. Alan Simpson, presented a Bill to provide for the election of a Council of State to replace the House of Lords; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed [Bill 226].

Education (Schools Parenting Role)

Mr. Michael Fabricant: I beg to move,
That leave be given to bring in a Bill to recognise the in loco parentis role of schools through amendment of the Ofsted inspection procedures; and for connected purposes.
The destiny of our nation is inextricably linked with the future of our nation's children. We have heard about that today. Their formative years spent at home and at school determine their lives and the course of society in our country.
With the sad weakening of the family unit and changes in adult life styles, it is increasingly falling on schools to provide youngsters with advice and help that would normally be given by parents. State schools are recognising that their role can no longer be just to educate in the normal sense of the word, but often is to be in loco parentis, providing the help, advice, support and comfort previously provided by parents.
That has long been the role of boarding schools, but the great achievement of our state schools has been their ready acceptance of that task. Some teachers in special schools believe that the parental role provides more practical assistance to pupils than any mainstream education. I understand that. In a few instances, children at special schools are neglected by their parents and find traditional learning difficult or impossible. Is the work of teachers in such schools, as well as in mainstream schools, to be ignored? The aim of my Bill is to recognise the parenting work of teachers; to recognise that teachers must play their part in providing an example of how to behave, imbuing moral values and showing children how to play a constructive part in society.
That vital work is an investment in all our futures. My Bill would require the Office for Standards in Education to recognise that in its reports. Schools that excel in such work also deserve the epithet "beacon". The work of teachers in providing such guidance should be universally applauded.
It would be wrong to think that such parental advice might be missing only in single-parent families or in deprived areas. Even in the leafy lanes of Lichfield, young people are often unwittingly neglected by busy parents—perhaps their fathers work late and their mothers, returned from work, have gone to keep-fit classes. I know of youngsters left alone to eat a pre-packaged meal while watching television or surfing the internet on their bedroom computers. Not for them the family meal and parental support. Deprivation takes many forms.
Providing parental guidance at school is nothing new. Boarding schools have long recognised the need to provide a balanced programme that partly substitutes for the support normally offered by a parent. For the past 100 years, many day schools have also taken up that duty.
For the past 10 years, there has been recognition in law that state schools should also play their part. Since the Education Reform Act 1988, piloted by Kenneth Baker, schools have been required by law to deliver
a balanced and broadly based curriculum which—

(a) promotes the spiritual, moral, cultural, mental and physical development of pupils at the school and of society; and
(b) prepares such pupils for the opportunities, responsibilities and experiences of adult life".




We also require teachers to be legally in loco parentis, with all that that means for pastoral care and welfare. For too many children, that important duty represents the main stability in their life. Such a source of guidance, spiritual well-being and moral fibre may not exist in their life away from school. Such pressures and expectations have been developing and will continue to expand as we move towards greater integration of students into the unified state education system.
Hon. Members on both sides of the House recognise that teachers play a major role in preparing young people for life. Of course they must include the three Rs and the rest of the core curriculum, but we are right to expect that our children should experience a range of skills, including communication, problem solving and working with other people.
Schools and their teaching staff have been going through a period of constant change. We know that we all live in a changing world, but the shifts in emphasis and the rate of change in education since 1988 have been unprecedented. The previous Government recognised that and put a five-year freeze on the national curriculum, but other changes have continued. There will soon be many new demands relating to key skills and post-16 education. There are rightly significant demands regarding literacy and numeracy. Soon, the precarious five-year freeze will be over. It is hardly surprising that teachers wonder what the future will bring.
From the beginning, it was recognised that school league tables would not take account of factors such as social and economic deprivation. Work is under way to provide some value added aspects in such data, but that is no easy task. It is a sad fact of human nature that the cruder forms of the tables will continue to gain most attention. For that reason, too, Ofsted should recognise the in loco parentis role played by teachers. Often teachers can play their most valuable part in bringing up worthwhile citizens in the most deprived areas. That sometimes overshadows more traditional teaching, although the league tables do not recognise it.
Perhaps if the Government see merit in the Bill—I am pleased to see the Minister for School Standards here—they will also think more generally about Ofsted. It is not unreasonable to demand accountability. At least Ofsted tries its best to take into account almost all aspects of a school's performance, but it must be time to review the entire Ofsted inspection system. It was introduced with all good intentions to improve standards in schools. Surely we must evaluate what has gone before and adjust our practices accordingly, as we demand of our teachers and learners.
Ofsted has become expensive. Surely some of the money could be better used in schools that we know to be under-resourced. It is an irony that Ofsted, which was

designed partly as a mechanism to enforce accountability, is accountable to nobody. Surely that needs to be addressed.
Despite all the pressures and demands on teachers, the in loco parentis responsibility remains and grows more challenging. Society looks ever more towards schools to fulfil the role once played by parents. Responsibilities for social and moral development, for supporting law and order and even for helping with local disputes that originate way beyond the school gates, are being pushed up the school drive.
I have heard schools described as museums of moral standards. Perhaps we are unreasonable to expect schools to impose requirements of behaviour, spirituality, general conduct and work load that exist in few other areas of modern British life. However, such expectations exist in such a fierce atmosphere of accountability that teachers work in the knowledge that the slightest perceived error of judgment is likely to be heavily criticised. In some ways, that is the greatest pressure of all.
I continue to applaud the efforts and successes of the teachers and schools that I know well, particularly in Lichfield. Our schools manage wonderfully in demanding circumstances. They do so because of a genuine desire to do the best they can for the young people they teach.
I address the House at the end of the parliamentary year, so there is no chance of the Bill becoming law, but I believe that the sentiments that I have expressed have cross-party support. I know that my voice will be heard in the Department for Education and Employment, and I hope that Ministers will implement what I have said.
It is time to value all that our schools have to offer. It is time to reward success. It is time to put our schools into a position in which further success can be sustained. That cannot be achieved unless we think a little more carefully about the contrasting and increasing demands that are being made. It cannot be achieved unless we recognise all the good work done by our schools, including their in loco parentis or parenting role. That should be included in the Ofsted inspection and reflected in the resulting league tables. We need more common sense on the issue, and I commend the Bill to the House.

Question put and agreed to.

Bill ordered to be brought in by Mr. Michael Fabricant, Sir Sydney Chapman, Mrs. Ann Winterton, Mrs. Llin Golding, Mr. David Amess, Mr. Alan Keen, Mr. Eric Pickles, Mr. Christopher Fraser, Mrs. Eleanor Laing, Mr. Ronnie Fearn and Mr. Peter Luff.

EDUCATION (SCHOOLS PARENTING ROLE)

Mr. Michael Fabricant accordingly presented a Bill to recognise the in loco parentis role of schools through amendment of the Ofsted inspection procedures; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 6 November, and to be printed [Bill 227].

ESTIMATES DAY

[2ND ALLOTTED DAY]

ESTIMATES 1998–99

Class IV, Vote 1

Beef Industry

[Relevant documents: Third report from the Agriculture Committee of Session 1997–98, on the UK Beef Industry, HC 474, and the Government's response thereto, HC 720; second report from the Welsh Affairs Committee of Session 1997–98, on the Present Crisis in the Welsh Livestock Industry, HC 447; The Ministry of Agriculture, Fisheries and Food and the Intervention Board departmental report 1998, Cm. 3904.]

Motion made, and Question proposed,
That a further sum not exceeding £142,691,000 be granted to Her Majesty out of the Consolidated Fund to complete or defray the charges which will come in course of payment during the year ending on 31st March 1999 for expenditure by the Intervention Board—Executive Agency in giving effect in the United Kingdom to the agricultural support provisions of the Common Agricultural Policy of the European Union; other services including BSE emergency measures; and administration.—[Mr. Rooker.]

Mr. Deputy Speaker (Sir Alan Haselhurst): With this it will be convenient to discuss the following estimate: class IV, vote 2—
That a further sum not exceeding £389,128,000 be granted to Her Majesty out of the Consolidated Fund to complete or defray the charges which will come in course of payment during the year ending 31st March 1999 for expenditure by the Ministry of Agriculture, Fisheries and Food on operational expenditure, agencies and departmental administration including BSE related measures; promote food safety; take action against diseases with implications for human health; safeguard essential supplies in an emergency; promote action to alleviate flooding and coastal erosion; to protect the rural economy particularly in Less Favoured Areas; encourage action to reduce water and other pollution and by other measures to safeguard the aquatic environment including its fauna and flora; improve the attractiveness and bio-diversity of the rural environment; implement MAFF's CAP obligations efficiently and seek a more economically rational CAP while avoiding discrimination against UK businesses; create the conditions in which efficient and sustainable agriculture, fishing, and food industries can flourish; take action against animal and plant diseases and pests; encourage high animal welfare standards; provide specialist support services, allocate resources where they are most needed; manage and develop staff; undertake research and development; and provide for the expenditure of the Ministry's executive agencies.

Mr. Peter Luff: We conduct this debate very much in the shadow of the comprehensive spending review, which at first blush seems to have had a relatively modest impact on the Ministry of Agriculture, Fisheries and Food. The target of reducing the incidence and costs of bovine spongiform encephalopathy may prove to be one of the least demanding facing any Department at present—and I congratulate the Minister of State on that. It also appears that an end to the calf processing aid scheme has been announced, to which we shall need to return later in the debate.
I emphasise that in no sense is this debate a Conservative debate, as some parts of the farming press have suggested. The debate is essentially on two Select

Committee reports, and is very much a House of Commons occasion. I therefore hope that it will not become a debate on MAFF's chapter in the comprehensive spending review. Our most recent debate on common agricultural policy reform was overtaken by a wide range of other issues. The beef industry deserves a debate of its own on the Floor of the House.
The report of the Agriculture Committee, which forms the basis of the debate, perhaps deserves a place in "The Guinness Book of Records", as two of its major recommendations were implemented while it was at the printers. The Government's decisions not to impose the costs of new specified risk material controls and the start-up and first-year running costs of the British cattle movement service were both very welcome and reflected the report's recommendations. However, I hope that the Minister of State will accept that the Government's description of those decisions as
a total saving to the industry of around £70 million
is a tad disingenuous. In fact, the Government's decision was, very rightly, not to impose £70 million of new costs on the industry.
I hope that the debate will be a forward-looking occasion—not an opportunity to allocate blame, but an occasion on which we look for solutions. Perhaps our colleagues on the Welsh Affairs Committee will want to say something about supermarkets. The long-awaited report from Tesco is now out. Many of us might not be totally convinced by it, but I shall leave others to dissect it if they choose. I hope specifically that the debate will not be about the history of BSE. The Phillips inquiry will report at about this time next year. For today's debate, let us start from where we are and not spend too much time worrying about how we got there.

Mr. Huw Edwards: Why not?

Mr. Luff: Farmers are genuinely worried and do not want us to play party political games with their future; that is why not. We must look to the future. The Labour party and other parties might want to make the most of the Phillips inquiry in a year's time, but for today let us please concentrate on the real problems facing British farmers.
Farming is in an exceptionally serious state, and our words will be carefully scrutinised by those outside the House. The debate may be about the beef industry, but its problems are very similar to those in the rest of British agriculture. There are many misunderstandings about farmers and farming, which often flow from the misunderstanding between town and country. A Yorkshire farmer was recently prosecuted for depositing slurry on the highway under section 161 of the Highways Act 1980. A motorist skidded on the cowpat and prosecuted the farmer. I am glad to say that, in its wisdom, the court dismissed the case, judging the cow, not the farmer, responsible for depositing the load. I sincerely hope that this debate will reveal a similarly enlightened attitude to the problems of British farming.
Perhaps unusually, this is genuinely an estimates day debate. Even though I have already said that I do not think that we should debate the history of BSE, it is worth offering a pat on the back—

Mr. James Paice: A cowpat?

Mr. Luff: MAFF deserves not a cowpat, as my hon. Friend says, but a plain pat on the back for last week's National Audit Office report, "BSE; the cost of a crisis". Whatever the rights and wrongs of the previous Government's policy, the NAO endorsed the quality of its implementation. The House's thanks must go to the officials for that. The report acknowledges the cost to the taxpayer, but on the implementation of the over-30-months scheme, for example, it says that the NAO regards
these as impressive results in the circumstances".
The report reminds us all:
The pressure on the Ministry and the Intervention Board at that time to respond quickly and effectively to this catastrophe was intense. There was no precedent for this situation which struck uncertainty and fear into thousands of farmers, hundreds of companies in the trade, and millions of consumers.
Against that background, a small team of officials did an outstanding job. The House should feel able to say, "Well done," to a small Ministry that achieved much against the odds but normally gets more than its share of brickbats.
This debate is about the future, but first I should like to describe some background. The National Farmers Union tells us that average producer prices of beef in pence per kilogram have fallen from 105.5p in 1996 to 89p today. The overall fall in farming incomes last year was about 47 per cent. I am glad to say that beef consumption in the United Kingdom is up by about 7 per cent. on this time last year, but without crucial export markets and given high levels of imports, producers still face great problems.
This debate is not just about farmers' problems. The beef industry is part of a much wider rural and, indeed, urban economy. Beef farmers play a vital part in the social life and the environment of much of the UK. Biodiversity, for example, in less-favoured areas, depends on traditional grazing patterns. An independent consultants' report to the Government on the economic impact of BSE on the UK economy in March said:
In 1995, the beef industry with final sales of £4,100 million created gross added value in the UK economy of around £3,200 million. This represented 0.5 per cent. of the UK's gross domestic product and supported 130,000 jobs.
It is a substantial industry by any standards.
Last year, in my county of—as it was then—Hereford and Worcester, the chamber of commerce, the county council, the Rural Development Commission and others demonstrated that 550 companies were ancillary to the beef industry. They were in agricultural services, meat wholesaling, slaughtering, agricultural engineering, road haulage, veterinary surgery and so on. A total of 5,200 jobs depended on those companies. At that time, as a result of beef farmers' problems, 56 per cent. of them had lost turnover. Total net losses to the county economy alone were as high as £40 million. At its worst, 260 jobs were lost. Therefore, the debate is about much more than farming.
Beef consumption may have recovered in the UK, but I hope that it is of some concern to the House to learn that, even now, according to the Meat and Livestock Commission, 80 British local education authorities are still banning beef altogether from school meals. Those LEAs include some predictable names, such as Islington and Greenwich. They include rural counties where beef production is important, such as Derbyshire and Oxfordshire. They include major cities, such as Birmingham, which is on the doorstep of both the Minister of State's constituency and mine. They include four Welsh authorities, including Swansea. Apparently, they even include otherwise sensible authorities, such as Wandsworth and Kensington and Chelsea. There is no party political point scoring to be had here.
There is no more justification for continuing those bans than the export ban. British beef is now unequivocally the safest in the world. As a memorable sign along the M5 in Worcestershire proclaimed last week,
British beef is safer than sex.
[Laughter.] I would not recommend both at the same time, however.
There is some concern in the farming community about the fact that the Government, understandably, often represent sums paid out in the wake of the BSE crisis as subsidy to farming. Much of that money is a means of protecting public health as much as protecting farming.
I think of Kites' Nest organic beef farm in my constituency, where not a single beast has contracted or could contract BSE. Yet it is obliged to sell its cull cattle into the over-30-months scheme and collect the so-called subsidy. The farm would be doing a lot better if customers could again buy its splendid organic beefburgers made from the same cull cows. The OTMS payments to that farm and to the many others totally free from BSE are not a subsidy to farming at all—on the contrary, they cost farms money—and the House should be clear about that.
Equally, we should be clear about the fact that farmers, my Committee, the Government, the House—everyone, in fact—would prefer agriculture to be moving towards a truly commercial marketplace. Farmers would rather farm food than subsidy. However, as our report said:
Given the impact
of the strength of sterling
on subsidies and prices, as well as the continuing problems of the BSE crisis, we think that farmers are right to expect the Government to treat them sympathetically.
We also said:
the crisis in the beef industry demands a response from the Government which may be in conflict with what would be desirable for the industry in the long-term.
The overwhelming message from my farmers—and, I expect, from the farmers represented by most other hon. Members—is "Lift the export ban and reduce the level of sterling." But there are also many important specific issues to which the Government will have to give responses in the next few months.
One concern that the Committee highlighted is the failure of successive Governments to pay enough attention to relative competitiveness, and the actions that Government can take in that regard. A Meat and Livestock Commission report on the competitive position of the red meat industry in Great Britain in relation to the


collection, processing and disposal of animal by-products showed an extra £129 million in overall costs compared to the costs of our major EU competitors.
For beef, the total cost was £58 million—£26.73 per animal per year, or 9.2p per kilogram deadweight. That is just one relative cost. Animal welfare and environmental costs come on top, and so do Government charges. The Committee said:
Many of the extra costs faced by the UK industry are not shared by their EU competitors. The Government's inability to supply more than sketchy information on the arrangements made in other Member States, specifically on charges for SRM controls and cattle traceability systems leads us to the conclusion that Ministers cannot have been able to assess the effects on the UK industry's competitiveness of their decisions in respect of those matters. This is of serious concern to us".
In their response to our report, the Government supplied some information on the situation in other EU countries, but it could reasonably be described as still sketchy. Interestingly, Germany was entirely omitted from the list.
I shall now make some other brief specific points, to which I am sure the House will appreciate as many responses from the Minister as possible. There was much gratitude in the farming industry for what the Minister of Agriculture did in December last year, but now, with the coming of the euro, new proposals are on the table from the Commission for the future of agrimonetary payments.
How will the Government respond to those? What will be their attitude to further requests from the farming industry in general, and the beef industry in particular, for more agri-monetary compensation payments this year? As our report said, in the context of the most welcome 22 December support package:
Should circumstances be the same at this time next year, the Government should be sympathetic to the plight of the industry.
On present trends, it looks as if circumstances will be very similar then, so I hope that the Minister will keep his options open on that issue.
Clearly, the over-30-months scheme should be phased out at some stage. There is no logic in continuing it unamended after 1 February 1999, and it seems to be conspicuous by its absence from the comprehensive spending review. The Government will have to start thinking quite urgently about how a market can be re-established for older cattle, so that we can begin the phasing out of the over-30-months scheme. Beef from cattle older than 30 months is perfectly safe, but I believe that there may be some consumer resistance to that idea. Work needs to be done now, to enable the phasing out to take place.
The Government have recently been consulting on the future of the calf processing aid scheme. It has played an important role in removing surplus male, mainly dairy, calves from the market, but it is an intrinsically unpleasant scheme, and the Committee said that public support for it would probably wane. I think that we would all wish it to go as soon as possible, but probably not quite yet. There must still be a mechanism to keep the beef market in balance at least until the export markets reopen, and probably longer.
The farmers to whom I have spoken would prefer to keep the whole scheme until market conditions are much more normal. However, that may not be an option for

the Minister. A much less acceptable alternative, but an alternative none the less, would be to ensure that all beef calves do not go into the scheme. The risk is that male dairy calves, reared and fattened on cheap cereal, could flood the market in 18 months' to two years' time, with serious consequences for beef farmers.
The comprehensive spending review appears to have trailed the abolition of the calf processing aid scheme. It has a £52 million full-year cost, entirely EU-funded; because of the Fontainebleau adjustment, that probably costs MAFF about £37 million. I shall be interested to hear what the Minister says about that scheme.

Mr. Andrew Hunter: Before my hon. Friend leaves the CPAS, will he extend his comments to embrace the point made by the Select Committee—that it was an indirect means whereby the United Kingdom was bearing the brunt of the restructuring of the European beef industry?

Mr. Luff: Indeed, that is a point to which I wish to return later. It was a matter of considerable concern to the Committee that there seemed to be some kind of agenda in play among our colleagues on the mainland of Europe to ensure that we bore the brunt of that restructuring. Clearly, that is unacceptable. There is over-production throughout Europe, and Britain must not bear the whole burden.
The rendering industry took a bit of a knock in the recent report by London Economics for Tesco. Indeed, I believe that at least one renderer is considering legal action against one or other of those bodies for what was said about it. However, whatever the rights and wrongs of rendering, we cannot duck the fact that the renderers' products have either collapsed in value or lost their markets altogether. For tallow, according to a Meat and Livestock Commission report, there are some opportunities for renderers at £70 per tonne, whereas before the BSE crisis they were getting up to £400 per tonne for the same products. I think that it is fair to say that the Government dismissed our suggestion of additional aid for the rendering industry, but I am not sure that that was the right response, and I shall be interested to hear what the Minister says about it.
As for restructuring, what exactly is happening? The Committee expressed its reservations about the EU scheme, and I know that the beef industry would appreciate some clarification by the Minister today. We were sceptical about the applicability of the EU scheme in the UK context, and there are also concerns about how far it can help tenant farmers. As my hon. Friend the Member for Basingstoke (Mr. Hunter) said, we are all concerned that the EU may be seeking to force the necessary restructuring of the Europewide beef industry on this country alone—perhaps as some kind of punishment for BSE. That remains intolerable and unacceptable, and I am sure that the Minister will resist it.
My Committee is currently considering rural development issues and the future of hill livestock compensatory allowances—a crucial issue in that debate. Alternatives to hill livestock rearing will not sustain many remoter rural economies, and traditional grazing patterns are crucial to the local environment. Again, some clue to the Minister's thinking in that area would be welcome.
Now I come to what is perhaps the most important issue. The success of the selective cull appears, after all, to be an important consideration for our partners in


Europe before they will move on from lifting the ban on Northern Irish beef to implementing the date-based export scheme.
Reports in this week's farming press suggest that Emma Bonino's consumer affairs directorate has concerns about the success or otherwise of the selective cull, and also wants all cattle bones classified as specified risk material. Mrs. Bonino also appears to be concerned about the effectiveness of our traceability systems. The muddled mailing from the British cattle movement service has probably impressed neither farmers nor the Commission.
None the less, I should be interested to know what the Minister's assessment is of the prospects for the implementation of the date-based export scheme. The best guess for the House now appears to be that it will not happen until early next year. Moreover, it is important to recognise that even then, there will not be a full lifting of the beef export ban, only of the ban on exports of beef from cattle under 30 months old. Exports of over-30-months beef will remain banned even then. Again, the Minister's clarification would be welcome.
The Committee noted that the Government considered expenditure on promotion to be a matter for the industry, but in the context of the beef export ban it said:
This position may have to be modified when the export ban is lifted to assist the UK beef industry in the difficult task of regaining sales in its previous export markets outside the EU.
I feel, as does the Committee, that when that time eventually comes, the Government will have to assist in the drive to recover lost markets. After all the money that has been poured into the beef industry in recent years, to fail to do so would be to spoil the ship for a ha'p'orth of tar. The Government appear to have found £2 million for Northern Irish beef following the lifting of that ban, so something pro rata for the rest of the United Kingdom would seem appropriate. A precedent appears to have been set.
My final specific point is something to which I shall not devote time, because it is too complex—the reform of the beef regime within the common agricultural policy. The Minister may be able to give us a clue as to how things are developing there.
In conclusion, the four big themes are: ending the beef export ban; improving the industry's competitiveness; the problems caused by the strength of sterling; and the need for a clear Government strategy for the industry. That is not a criticism of this Government—the Select Committee was careful to say that successive Governments had failed in that task. Even within the constraints of the common agricultural policy and the World Trade Organisation, the Government can set a course for our beef industry. If, as they attempt to do so, the Government think about those four themes in all that they do, they will not go far wrong.
As we say in our report,
once the industry is through its present serious difficulties, its future will be bright. We wish to see a prosperous and thriving UK beef industry, and we have confidence in the resolve of the industry to re-establish itself as a leading force in global markets.
We said that the industry's economic revival should be built on the foundations of quality, safety, traceability, our comparative advantage as a nation of beef production, an end to market-based support mechanisms and the industry's own desire to set high animal welfare standards. We also spoke of the need for Government assistance for industry initiatives to improve marketing

and management skills in the farming community—something to which the Select Committee attaches special importance.

Mr. Geoffrey Clifton-Brown: Increasingly, the Commission comes up with schemes that involve more national discretion. Did the Committee address the question whether the Government would apply for that discretion, and, if they did not, whether other competing countries that did apply, such as France and Germany, would then be competing in our market from a lower cost base?

Mr. Luff: We did not do that in the context of the beef industry report, but it is a matter that we are keeping under constant review in our discussions about the future of the CAP reform and Agenda 2000. Many farmers are expressing precisely the concern raised by my hon. Friend, so it is important for the House to bear that in mind.
There are grounds for long-term optimism in the beef industry, but for the short term it will be very difficult indeed. One local farming business in my constituency wrote to me last week:
Our future as an industry looks bleak. Agriculture is standing on the edge of an abyss and if we are not thrown a life-line soon, it is only a matter of time before we all fall in and disappear forever.
However, Don Curry, chairman of the Meat and Livestock Commission, said, when introducing a report which predicts 2.4 per cent. annual growth in world meat consumption:
all is not doom and gloom. There are long-term opportunities, but there are challenges too, and the British industry needs to improve competitiveness, particularly in relation to other EU countries.
The opportunities are there, and the Select Committee believes that the Government can play their part in seeing the beef industry through to the time when it can take advantage of them.

Mrs. Diana Organ: When I meet beef farmers in the Forest of Dean, they tell me that they are just holding on. They have had a terrible time as the cash value of a finished steer or heifer has dropped 30 per cent. from 1995 values. They put the situation down to three factors—the high value of sterling, the dominance of the multiple retailers and the devastating effects of BSE leading to the beef ban and the loss of their markets and consumer confidence.
My beef farmers are a realistic lot. They tell me that, although Government policy has played a part in the strengthening of sterling, they recognise that European monetary union is a major pressure in that process, and they rather begrudgingly accept that, for the time being, the strong pound is a fact of life. However, they expect the Government to behave with the utmost sympathy during this difficult time—a point made during the Select Committee's inquiry, which was published earlier this year.
The hon. Member for Mid-Worcestershire (Mr. Luff), the Chairman of the Agriculture Committee, said that we do not want to go over history, but history is important if we are to understand the present. My beef farmers know that the single biggest factor in the present situation has been the BSE crisis; they are having to cope with the terrible legacy of it.
We have heard that the Conservative party has set up a shadow Cabinet sub-committee on the countryside and rural affairs. The right hon. Member for Fylde (Mr. Jack) said that the
Committee's priority would be to act as whistleblowers on Government policy which would be harmful to the rural economy or way of life.
The Government do not need such a committee to act as whistleblowers; the National Audit Office does the job much better in its report, "BSE, The Cost of a Crisis", published on 8 July.

Mr. James Gray: rose—

Mrs. Organ: I am afraid that I cannot give way, as I want to make progress and I have only limited time.
The NAO has said that the BSE crisis has been the single most expensive peacetime catastrophe. The cost is set to rise to more than £4 billion before 2000, the biggest part of the bill will be compensation to farmers, and average compensation for younger animals being slaughtered is £1,400.
The previous Government's handling of the whole beef saga is a tale of mismanagement and ineptitude—such as the lack of response to the Select Committee's recommendation in March 1994 that they should ban offal and brain substances in the food chain. That recommendation was turned down. The NAO report points out that, in their panic after March 1996, the previous Government did not act in the best interests of taxpayers but threw money indiscriminately at the problem.
The report questions some of the financial deals struck with farmers, slaughterers and renderers. There was no proper competitive tendering—slaughter fees were simply set at £87.50 per animal in May 1996, even though there was over-capacity in that sector. In reality, the cost was closer to between £39 and £51 per animal, as Coopers and Lybrand found in an open book examination in July 1996. The fee was not reduced to £41 until late August 1996, and competitive fees did not come in until this Government put them in place in July 1997.

Mr. Hunter: Will the hon. Lady give way?

Mrs. Organ: I hope to make progress. There is very little time, and I grading would like other hon. Members to be able to get into the debate.
The NAO report states that the £670 million compensation paid to farmers in 1996–97 was too generous for beef animals. That financial mismanagement of the affair is an example of how the whole situation was handled. In addition, the lack of unity in the Conservative party on European affairs did not help. They continually call on us to claim agrimoney compensation that they know is not available. It is interesting that the Conservative party, over the period of the crisis, did not ask for it or get it. However, we have secured £85 million compensation, which we announced as part of an aid package in December 1997, using up almost all the aid that we can apply for.
The decline in farm incomes and the depression in the beef industry did not appear after 1 May 1997. We have had to pick up the pieces of the Tory legacy.

We have introduced a raft of measures to help the beef sector—additional hygiene measures to restore confidence; the introduction, on time, of the cattle traceability system and paying for the set-up and first year running costs; the launching of the beef labelling scheme, supporting the assured beef meat initiative to the tune of £1.8 million; and publishing hygiene assessment scores from UK slaughterhouses.
I note that my two local slaughterhouses, Ensors at Cinderford and Lyes at Minsterworth, have excellent scores in this month's enforcement report. This Government, with other European Union states, the Parliament and the Commission, have worked tirelessly to lift the beef ban, with the first exports of Northern Ireland beef being reported in last week's Farmers Weekly.

Mr. Paul Keetch: Will the hon. Lady give way?

Mrs. Organ: I will not, as I have told other hon. Members. I want to make progress so that other hon. Members can speak.
We are pressing for a wider lifting of the ban under the date-based export scheme. The proposal to permit the export of beef from cattle born after 1 August 1996 has now been referred to the Standing Veterinary Committee. We will shortly press in the Council of Ministers for the decision to be made on a scientific basis alone.
As the hon. Member for Mid-Worcestershire said, the Government have agreed to almost all the recommendations in the Select Committee report. We have already put many of them into place. As the hon. Gentleman said, two of them were put in place while the report was being printed.
Another factor that beef farmers in the Forest of Dean claim is responsible for poor farmgate beef prices is the dominance of the retail multiples, which control 70 per cent. of retail fresh meat sales. Farmers know that their industry is cyclical. All livestock producers know that markets go up and markets come down. Sometimes it is good for producers, sometimes it is good for retailers, but since the mid-1980s farmers have faced increased pressure from retail concentration in the beef supply chain and hence surprisingly low returns.
Before the mid-1980s, farmers would grumble about the butchers making money, but they did feel that it was a matter of "a season for us, the next season for the butchers". That has gone; the game has now changed. Even during the present difficult situation, retailers have been able to hold their margins. The Meat and Livestock Commission states:
Supermarkets have continued to make steady margins on beef sales over the past two to three years while returns for producers have slumped.
That was the commission's conclusion in response to the Welsh Affairs Committee in March, and it remains the case.
In response to the London Economics report "The Supply Chain for Beef and Lamb"—commissioned by Tesco—Don Curry responded by saying:
it is clear the multiple sector has not shared the reduction in industry returns in the past two years.


That is bad news for producers and consumers, but not for the retail giants.
The London Economics report has an element of controversy about it, the second draft being a revision of the first; the comment that beef farmers had been inefficient and complacent operators immediately before the BSE crisis was withdrawn. The National Beef Association said that the report was not fair, factual or independent, as it was commissioned by Tesco.
The final report proved that supermarkets have not been making huge profits from the sale of beef or lamb. They have not been making excess profits after BSE, because their margins have been eroded due to the post-BSE added costs and the specified risk material controls, with the gap between producer returns and retails rising by 23p per kilo since March 1996 and the costs due to BSE increasing by as much as 27p per kilo. The incurred costs of the processing and market chain have not led to increased profits for retailers.
I should have thought that that argument was undermined by the obvious fact that slaughterhouses are paying less for cattle. Tesco is selling beef as a loss leader for other, more profitable, foodstuffs. It states that beef was the biggest loss maker in its entire meat category in 1997–98.
Whatever the report says, the multiple retailers are using their ever more powerful grip on the market and are abusing their buying power—and farmers are suffering as a consequence. That pressure—particularly when other supermarkets are buying meat on price alone from overseas processors who do not face the same regulations and have little regard to quality or concern about how the animal is reared—makes it difficult for our domestic producers to compete, even with their high quality, safety and hygiene regulations and some of the best animal welfare standards in the world. Labelling should inform the consumer of all that.
It is not all doom and gloom, as the hon. Member for Mid-Worcestershire stated. Consumption is up and confidence is being restored. Beef is back on the menu in many schools. British beef is back in McDonald's hamburgers. There has been a 7 per cent. increase in home beef in the first quarter of 1998 over 1997. My local National Farmers Union representative, Robert Purdey, tells me that there has been a small increase in the beef price of late and that feed costs have gone down. Locally in the Forest of Dean, the small organic beef sector is faring extremely well, aided by the marketing strategy of the Forest of Dean food directory. I commend that document to the House.
Beef producers receive more than £500 million each year in normal beef subsidy. It is a difficult time, and producers are facing problems, but there are opportunities in the long and short term. It is predicted that there will be a 2.4 per cent. growth in world meat consumption in the next seven years.
The Meat and Livestock Commission has close contacts with Europe and, although it will take time, many caterers and retailers there want our beef. I look to the Minister to assist in promoting beef when the European market is open. If farmers come together, they should be able to put pressure on the retail markets. With assistance from the Government, we should be able to give the consumers what they want—quality and food safety, and good British beef that can be delivered competitively.

Mr. Charles Kennedy: In following the well-informed speech made by the hon. Member for Forest of Dean (Mrs. Organ)—and the excellent opening speech by the hon. Member for Mid-Worcestershire (Mr. Luff), the Chairman of the Select Committee—I start by saying that I hope that the hon. Lady will forgive me for reflecting that, at times, such was her clarity and authority that her speech sounded like a ministerial intervention in terms of the Government's response to the Select Committee report rather than a supportive contribution from the Government Back Benches. Those of us who have been in the House for a while remember another female politician who used the royal "we" in a similar fashion. Perhaps we were listening to a throwback to that a few moments ago.
I congratulate the hon. Member for Mid-Worcestershire and his Committee colleagues on the report. I link his name to that of the Chairman of the Welsh Affairs Committee, the hon. Member for Clwyd, South (Mr. Jones). That Committee has done some excellent work on the supermarket aspect.
The hon. Member for Mid-Worcestershire was right to say that the debate takes place in the immediate context—perhaps one should say shadow—of the Chancellor's statement, which immediately preceded it. Being a quintessentially fair-minded person, and never one to jump to instant conclusions, the hon. Gentleman spoke of what he thought of as the modest implications for MAFF of the statement. Having had no more time than the hon. Gentleman to look at the figures, I suggest that that modesty could be slightly more ominous in due course. Food safety, correctly, is being hived off to an independent agency, but the mission statement of MAFF is changing profoundly alongside that. Coupled with some of the initial figures—which we will need to look at in greater detail—some alarm bells may yet sound in agricultural communities and the various section heads in MAFF.
I, too, wish to touch briefly on the export ban, on compensation payments and controls and on the continuing problem underlying so many of the present difficulties—the strength of sterling. All quarters in the House and all parts of the country have welcomed the progress on the lifting of the export ban for Northern Ireland. That is good news, but we need more progress on the date-based scheme, which, frankly, appears to be bogged down by political shenanigans in Brussels.
I was in Brussels speaking to officials a couple of weeks ago. There is no doubt that the Standing Veterinary Committee has postponed further inspection consideration, and is unlikely to consider the matter again in Brussels until September. By then, the GB database on animal movements should be up and running, and one expects that DG XXIV will want that linked into the scheme. Allied to that, the German elections will be imminent. It is easy to see that the Standing Veterinary Committee—and the political and Council decisions that may flow from it—may be subject to further political delay as a result of the German elections timetable.
Some advantage has been taken of those events in a way that has not been designed—I put it no more strongly than that—to bend over backwards to help British Ministers and the British Government in their genuine efforts.
The hon. Member for Mid-Worcestershire was right: we must look forward in this debate. In looking forward, however, the recent experience examined by the Committee gives some important pointers. At the time of the March 1996 export ban, the veal calf market collapsed overnight, affecting about 500,000 animals. The calf processing scheme was brought in to compensate those affected—mainly in the dairy sector—by the loss of their market. That had the additional benefit of reducing the number of cattle produced in the EU. However, that has proved to be yet another example of action taken domestically here which has helped to bail out people elsewhere in the EU without providing any great return, merit or benefit to us.
Any halting of the scheme would lead to disaster if the veal market was not properly restored to farmers who have been hit. Once the date-based scheme is established, over-30-months cattle should be able to re-enter the food chain after February next year. That will lead to a serious early glut in the beef market, and it will be important that the ancillary measures taken in Scotland, England and Northern Ireland in terms of advanced promotion are redoubled by the Department to ensure that we can take as early advantage as possible.
Mention of February next year leads me in passing to something we debated in the House ad nauseam, if not ad infinitum—probably both: the ban on beef in the bone—[HON. MEMBERS: "On the bone."]—on the bone. The Minister may feel that it is in his bones these days, he has had to defend it so often at the Dispatch Box. The Minister knows the views of Opposition parties and I shall not rehearse them here, but there is not much practical need for that. I am not accepting the need for it here and now, but there will not be much further particular need for that beyond the date itself. That seemed to be the implication of the interview given recently by the Minister of Agriculture to the Financial Times.
I notice that the English court case against the restaurateur who sold beef on the bone has been rather quietly dropped. That being so, this is a further golden opportunity for the Government to save the public purse by not pursuing the Scottish case, which is now the only one outstanding and which has been referred by the Court of Session to Selkirk sheriff court. We know that we are beginning to see the light at the end of the tunnel, even given the stupidity and unnecessary nature of the policy, so why not just drop the Scottish case completely?
In 1997, a 47 per cent. drop in farm incomes was recorded by the NFU, showing suffering not only in the beef sector but across all sectors of the farming community. It can be seen most tellingly in the Welsh agriculture community, where beef and sheep rearing often occur on the same holding, subjecting farmers to a double whammy. That needs to be taken on board still further.
The London Economics report for Tesco has been mentioned. Even with the cloak of parliamentary privilege, no one wants to end up in the legal action that may yet be pursued as a result of all this but, as the hon. Member for Forest of Dean fairly said, that report revealed that whatever view one takes of the activities of supermarket chains—I incline towards the sceptical or

critical view of their activities—the fall in farm gate prices is indisputable, not least because of the concentrated nature of the farming activity involved.
If the plug is pulled on someone's main or one of their two main activities, they are at the mercy of wider events and not in a position to exert much influence, but a Tesco or a Sainsbury that experiences a loss in one of its product ranges is always able to expect—indeed it encourages—the consumer to switch to other forms of produce and thus cross-subsidise product lines. The only group in the process, which includes the abattoir sector and the supermarket sector, that has been entirely exposed throughout since the imposition of the beef ban are the farmers, because they have no cushion and no alternative means of defence against the economic conditions that have been visited upon them.
The collapse in the beef market—BSE was central to it; for example, the Welsh market has fallen 28 per cent. since 1995—has been exacerbated by the strength of the pound and the unwillingness to access compensation funds available through the EU. Moreover, the additional regulatory controls imposed on our producers are not duplicated for competitors in other parts of the EU.
Those controls have been brought in to address understandable safety concerns. People will not object to them, but they have placed additional burdens at a time of massive disincentive and difficulty. The Meat and Livestock Commission has estimated that those costs come to some £27 per animal. Bearing in mind the prices achieved for the beasts involved, that is an horrendous further removal of any hope of profit—never mind viability—for many of the farmers involved.
The pressures have been eased, although not entirely alleviated, by the Government's removing the cost to the industry of Meat Hygiene Service inspections of abattoirs and paying the start-up costs of the computer traceability system and the first year running costs. At a time when the black art of spin doctoring is not commanding the most favourable headlines, the hon. Member for Mid-Worcestershire made a fair point: saying that the postponement or cancellation of a cost which is not being borne at the moment represents a net saving to the overall economics of an industry is perhaps an example of spin doctoring meeting voodoo economics. The Government need to be slightly more cognisant of that in their approach.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Jeff Rooker): The work is still being done. The taxpayer is paying for the work in the abattoirs. That is new. It is not as though the work is not being done. The Government's decision that the taxpayer should carry the burden amounts to a cost saving for the industry.

Mr. Kennedy: I do not buy that argument. That is similar to saying that the private finance initiative, where one removes the cost on the broadly based taxpaying public and concentrates it on one specific community or area for the project involved, is somehow a net saving. It is not. It is an additional cost on the people who are directly involved rather than spread more broadly across taxpayers. An important political principle is involved there, and a similar principle applies in this regard.
The present level of sterling means that UK farming is rendered uncompetitive, even in commodities that we are allowed to export. That has opened up domestic markets.
We should access the EU funds that have been established to deal with the situation, as other Governments in the EU have done. We need lower exchange rates and lower interest rates. The options open to the Government are time-limited, the next time limit being 31 July, because the aid has to be accessed within 12 months of green pound revaluation.
Although we are not having a particularly party political debate this afternoon, the Government should be more seized of the wider economic issues because they, like us, are, in principle, committed to sterling's entry into monetary union. In the United Kingdom, only the Conservative party is not. The Government should recognise that sterling's early entry into EMU would in all likelihood reduce the strength of sterling, from which agriculture, like manufacturing industry, is suffering. They have to take note of the fact—the Tories are isolated on this—that the leadership of the NFU is now expressing support for the principle of sterling's involvement in EMU, precisely because it can see the benefits that would accrue to its membership.
I conclude on a point that I have raised a couple of times during Agriculture questions, which the Ministry needs to consider further. Given the sums of money that, according to the National Audit Office report, have been paid out for, one hopes, the extraordinary occurrence of BSE and its associated costs, and the follow-through costs because of the collapse in agricultural incomes generally, the Ministry, in its attitude towards taxpayers' money, needs to think more carefully about the extent to which the dramatic rise in the number of farmers and their families having to take additional social security and income support, which, in most cases, has never been necessary before, is proving a bigger drain on the economy than is necessary, given the sums that could be saved by accessing EU funds and doing something about the strength of sterling.
At the other end, surely we need to consider early retirement schemes. If they are to be applied, they need to be much more sensitively structured than is currently the case at European level. As proposed, they would lead to further amalgamations and bigger individual farming units and would have a detrimental effect on tenant farmers, who would have to give up their property and their homes and find somewhere else to live. The matter is not sufficiently related to the needs and realities of UK agriculture.

Mr. William Cash: Will the hon. Gentleman give way?

Mr. Kennedy: If the hon. Gentleman will forgive me, I am about to conclude.
I congratulate both Select Committees on their work. They have given extremely telling pointers for the beef sector in particular, for the role of supermarkets in general and for the future of viable, family-farmed UK products as a whole.

Mr. Paul Marsden: As a member of the Agriculture Select Committee, may I first pay tribute to the staff and particularly the Clerk, and to the Chairman, the hon. Member for Mid-Worcestershire

(Mr. Luff), who has shown fine leadership and a certain fairness. We can safely say that our Committee is one of the most productive in terms of its reports.
Farmers in Shropshire have had to endure horrendous hardship. They have shown strength of character in having come through such trying times, and they still deliver some of the finest-quality products, despite difficult financial circumstances.
The beef industry's aim must be to deliver world-class, safe, traceable beef, but it needs a level playing field within the European Union. We must restructure the industry if we are to deliver a real future for our farmers. There is no going back, so we must take account of the BSE crisis. Farmers must recognise that high animal welfare standards are an integral part of any restructuring, and must embrace any improvements to the local environment. If they can achieve those aims, we shall be able to have a thriving and, importantly, a sustainable beef industry.
There has undoubtedly been a long-term decline in beef sales. In its recent controversial report, the London School of Economics said that, on average, there was a 2.5 per cent. decline every year between 1985 and 1995. Clearly, before 1996, there was an over-supply of beef in the European Union, which amounted to some 116 per cent. of consumption needs. That is why restructuring the industry is absolutely vital.

Mr. Gray: The hon. Gentleman is right to say that there is an over-supply of beef within the EU as a whole, but does he accept that the United Kingdom produces only some 70 per cent. of the beef eaten locally, so there is no over-supply in the United Kingdom?

Mr. Marsden: I note the hon. Gentleman's comment, but many farmers have suffered in the short term. Although they have great potential to meet requirements, there is still an over-supply. Once the European beef ban has been lifted, there will be enormous potential. I agree with the hon. Member for Mid-Worcestershire that the European market can allow for an expansion of beef exports and hence an expansion of beef production, but the figures do not support the hon. Gentleman's point.

Mr. Keetch: Would the hon. Gentleman like to comment on the view of my hon. Friend the Member for Ross, Skye and Inverness, West (Mr. Kennedy) that political constraints are stopping the lifting of the beef ban? Does he genuinely believe that the farmers of Shropshire, Herefordshire, Worcestershire and Gloucestershire will see the beef ban lifted before the German general election in September? That is what is stopping the lifting of the beef ban. Should not the Government press for the beef ban to be lifted on scientific grounds, in line with the Florence criteria, rather than simply wait for the results of the German general election?

Mr. Marsden: That is precisely what the Government are doing, and they have made great headway. The first stage has already occurred in Northern Ireland and great steps have been made in terms of the cattle tracing system and the date-based export scheme. Those great strides were not made under the previous Administration. The Government's success has a lot to do with how


welcome Britain is within Europe: we are now given a fair hearing, whereas under the previous Administration we were not.
I agree that the strength of sterling has caused serious problems for exporters in terms of compensation rates. I also agree that the price of beef has fallen. In 1995, the price was 244.4p per kilo and, by the end of 1997, it had fallen to 182.4p per kilo. We must remember that, in the two previous years, it fell by 30 per cent., so the origins of the substantial fall, which has translated into a substantial fall in farming incomes, go back many years before the Labour Government came to office.

Mr. Cash: Will the hon. Gentleman give way?

Mr. Marsden: I should like to make a little more headway.
I shall sum up some of the Government's actions to date. They have achieved maximum application of EU agrimonetary compensation for the beef industry. They have made progress on lifting the beef ban, which is critical. As other hon. Members have said, that is the first priority. The cattle tracing scheme is progressing well and, despite a slight hiccup in setting up that impressive system, which is clearly leading Europe and, arguably, the world, the system will shortly be implemented. The date-based export scheme is proceeding well, as is the quality assurance scheme.
As a former quality manager, I have found that the quality assurance scheme works well, and will be important when it comes to labelling British beef abroad. Once British beef is labelled and allowed to be sold abroad, there may be problems. By guaranteeing our product in the first place, we shall quickly win over consumers abroad.
The Government are taking a partnership approach. They have made good progress, but farmers must realise that change will come in great abundance.

Mr. Cash: I invite the hon. Gentleman to cross the border from Shropshire to my constituency in Staffordshire and chat to some of the farmers there. I spoke to them only last weekend, and they certainly do not share the views that he has just expressed. Interest rate rises, not to mention the ban on beef on the bone, have brought disaster to rural communities. I live in Shropshire, so I also hear what the hon. Gentleman hears in his surgeries.

Mr. Marsden: I thank the hon. Gentleman for his comments, which show that the Conservative party is split from top to bottom on Europe. Farmers have been hurt in the past, but the blame lies fairly and squarely with the previous Administration. Farmers are now far more hopeful of having the beef ban in Europe lifted than they were 12 or 13 months ago.
There are some good practices around in the farming industry. Although the industry now offers high-quality products, it must continue to improve its farming techniques and to raise animal welfare standards. I acknowledge that our farming industry leads the way but, to stay ahead of the game, it must continue to improve.
I press the Government at every opportunity to create a Ministry for rural affairs, which would alleviate some of the problems of lack of investment in certain rural areas. I trust that, as the Government refocus the Ministry of Agriculture, Fisheries and Food, they will look actively at implementing my suggestion. I share the Select Committee's distaste for the calf processing aid scheme, and the concerns of hon. Members that Britain is taking on far too much in respect of the CPAS and Europe is not implementing its fair share.
Talking to farmers day in, day out, I still find that they would not want subsidies if they had a level playing field. I urge the Government to move slowly but clearly, to hold their vision of where agriculture will be in the 21st century and to ensure that we phase out support schemes, but at such a pace that farmers can cope. Quality assurance schemes are working well, and we must have better dialogue between the ministerial team, Parliament and rural communities, which perhaps should be listened to and understood better than they have been. The sharing of best practices is a way forward, because some farms can clearly produce their produce far better than others—we must learn from each other.
Conservative Members called for vast investment in farming communities, but where would that money come from? That is the central question; it is easy to call for extra funds in opposition, but, if they are serious, which hospitals and schools would they cut and where would they find the money?

Mr. Michael Jack: Will the hon. Gentleman give way?

Mr. Marsden: I am wrapping up my comments, and I should like to finish on this point, because it is the central problem facing the Opposition.

Mr. James Gray: I welcome this timely debate, and congratulate my hon. Friend the Member for Mid-Worcestershire (Mr. Luff), the Chairman of the Agriculture Committee, on its fine report. It is a bit of a disappointment that it has taken the report to prompt such a debate in the House, and many of us are disappointed by the scant regard given by the Government to the beef industry over a number of years. [Interruption.] It is indeed a year and a half, which technically counts as years.
The Government have given scant regard to the beef industry during their time in power. The debate is the third on the subject, and all have been very brief. Equally, this is the third debate in which the Minister of Agriculture has failed to appear. It may be said that it is not his role to answer such a debate, but he failed to turn up when we discussed the beef on the bone ban. We discovered him in the Smoking Room, with a large glass of brandy and a cigar in hand, while the biggest crisis to face British beef farmers for many years was being debated in the House. It would have been nice if he had shown good grace and turned up to listen to what we were saying about beef farming.
Wherever I go in the farming industry, there is a marked shortage of Labour appearances, for example at agricultural shows. I was at the Bath and West show a couple of weeks ago, and seven Conservative Members


attended. I understand that, far from any Minister turning up, invitations to Ministers' offices were not so much as answered. That is the experience at agricultural shows up and down the land. At the royal show last week, four Ministers turned up—

Mr. Deputy Speaker: Order. There is limited time for the debate, and many hon. Members want to speak. I recommend to the hon. Gentleman that he stick closely to the subject at hand.

Mr. Gray: I shall indeed do so, and I am grateful for your correction, Mr. Deputy Speaker.
The Government seem to have scant regard for the deep crisis facing our beef farmers, so I thought it reasonable to make the point that Ministers are not turning up to agricultural shows to find out what beef farmers have to say. In contrast, my right hon. Friend the Member for Fylde (Mr. Jack) came to Chippenham livestock market in my constituency and spent three hours not with managers or the National Farmers Union, but on the floor of the market, talking to beef farmers and finding out what they had to say.
I would challenge the Minister, if he were listening rather than chattering, to let me know how many livestock markets he has visited this year, and how many livestock farmers he has spoken to. Perhaps his parliamentary private secretary will let him know that I asked the Minister that question, because he is plainly not listening. If he took the trouble to meet beef farmers in the way that my right hon. Friend the Member for Fylde has done, he would come across things such as the headline in our local paper this morning: "Profits Alert As Farmers Hit Meltdown". As we all know, 47 per cent. were affected last year.
The report in the Western Daily Press last Friday suggests that beef farmers face an 88 per cent. cut in their incomes in the year ahead. The Western Daily Press analyst refers to a 66 per cent. reduction in the number of beef farmers in the west country. That is not a problem or a crisis; it is a catastrophe.

Mr. David Drew: If the hon. Gentleman read the article to the end, he would see that it says that things are looking much better for those farmers who will stay in beef.

Mr. Gray: The hon. Gentleman is right: 66 per cent. of west country farmers will go out of beef, so things will be better for the 34 per cent. who are left. For the 66 per cent. of farmers in my constituency who will be out of beef within two years, that is a tragedy, and the Government should be deeply ashamed of it. It is also a tragedy for small family farmers, who are so well represented in the hon. Gentleman's constituency and in mine.
The hon. Gentleman is right in that huge agribusinesses with huge acreages and huge numbers of cows may be all right but, according to the article in the Western Daily Press, small family farmers such as those in my constituency, who have been laying off their help and who are now running their farms themselves, will be out of business. Such farmers in his constituency will also be out of business, and I am surprised that he takes such a light-hearted attitude to that approaching family tragedy.
In the context of the care given by the Government to rural life and beef farming life in particular, it was interesting that the hon. Member for Shrewsbury and

Atcham (Mr. Marsden), to whose careful speech I pay tribute, referred to a Ministry for rural affairs, which was promised by the Minister for the Environment on the splendid occasion of the 1 March rally in London. He also promised a rural White Paper, but it has been discovered through recent parliamentary questions that I have tabled that the Government are backing off hard from the notion of such a Ministry.
When the Minister of Agriculture was due to address Action with Rural Communities in England recently, the original title of his speech was "Towards a Rural Affairs Ministry", but I understand that, under pressure from the Deputy Prime Minister, he changed the title and moved away from any reference to such a Ministry. I challenge the Minister of State to say whether the Minister for the Environment was accurate on 1 March when he said that the Government would be moving towards a Ministry for rural affairs, and whether the Minister of Agriculture changed the title of his speech to the ACRE conference last week.

Mr. Rooker: I gave the speech to the ACRE conference.

Mr. Gray: In that case, we can have it from the horse's mouth. I am delighted that the Minister has given us that information. Was the original title of the speech "Towards a Rural Affairs Ministry"? Was he forced, under pressure from the Deputy Prime Minister, to change the title to one that bore no relationship to that matter? I shall happily give way if he wants to say categorically that he never planned to make a speech with such a title. The Minister seems to be shaking his head—it is often hard to tell whether he is shaking his head or nodding it. I shall happily give way if he will tell us about the title of the speech to ACRE.
At the time of the 1 March rally, the Government promised a rural White Paper, which is important for our rural areas and our beef farmers. From answers to recent parliamentary questions, it appears that they are backing off from the notion of a rural White Paper and they have of course given up annual updates to "Rural England" and "This Common Inheritance".
I shall move rapidly on to the beef industry, Mr. Deputy Speaker, before you pick me up on my remarks, although I defend what I have said: these issues are of key importance, and if we face a 66 per cent. meltdown—

Mr. Deputy Speaker: Order. If the hon. Gentleman has already started to dig himself into a hole, he should stop digging.

Mr. Gray: Thank you, Mr. Deputy Speaker.
The Minister should address three issues. The first, about which we have heard a great deal, is the beef ban. When will it be lifted? We know that the five conditions in the Florence agreement were fulfilled many months ago and that the Government said that they would be listening carefully and working hard with their close friends in Europe to lift the ban. Here we are, 18 months or so after they came into power, and there is no sign of the ban being lifted for the mainland, although we all welcome the lifting of the ban—albeit partially—in Northern Ireland.
Incidentally, it would be interesting to hear from the Minister whether Northern Ireland beef processors will be allowed to export beef on the bone. I understand that,


currently, they will not be allowed to do so. That brings us to the second great issue: the ban on beef on the bone, which has had such damaging effects on consumers' interests. Will the Minister shortly turn around, admit that he made a mistake and overreacted to the report by the Spongiform Encephalopathy Advisory Committee, and lift that absurd ban?
Another issue that preoccupied the beef farmers whom I met on the floor of Chippenham market last week was the over-30-months scheme. Will the Minister now consider whether the scheme still has a role to play? Will he consider whether beasts born after September 1996—particularly those with no signs of maternal transmission—can now be excluded? If so, with what will he replace the current arrangement?
The hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy), who is no longer present, mentioned the calf processing aid scheme. It has been argued that the scheme has outlived its usefulness, and perhaps is producing some curious anomalies. I believe that, in some quarters, low-quality calves are being bred specifically for its purposes. If the Minister is considering doing away with the scheme, does he agree that that would have to occur when the export of live calves was reintroduced? If he acted before that, the results would be disastrous for beef farmers.
The Minister must also pay urgent attention to the Government's entire approach to the economy. There is no doubt that the strength of the pound is having appallingly deleterious effects on beef farmers. Even if the ban were lifted tomorrow, if the pound remained as strong as it is now, who is to say whether the strength of imports would continue? I suspect that beef farmers would find themselves in a position similar to the current position of milk producers who, no matter how much they produce, cannot export it because of the strength of the pound.
Moreover, strong interest rates—which, irrespective of whether the Government have given control of interest to the Bank of England, are the Government's fault—are bearing down especially heavily on beef farmers with mortgages. Most of the small family farmers in my constituency have mortgages, and, month by month, must find cash to repay them. When will the Government act to lower interest rates, and to safeguard the interests of those family farmers?
Urgent and decisive action is required if the Government are to address the real problems that have been outlined today. I invite the Minister to visit Chippenham livestock market on any Friday that he cares to mention, between 11 am and 2 pm—I know that the farmers will welcome him—and to hear first hand from my farming constituents how life has become increasingly difficult over the past 12 months.
I am very concerned about the report in the Western Daily Press that suggests that 66 per cent. of beef farmers in the west country will shortly go out of business, and that—in the words of its headline—the beef industry there faces "meltdown". I question whether the Government are as concerned as I am; I suspect that their interest lies with the consumer rather than the farmer. If, however, the Minister says that he is as concerned about family farmers as I am, will he visit my constituency? Will he visit the

Chippenham markets? Will he go into the beef ring, as my right hon. Friend the Member for Fylde did last Friday? Will he address the farmers? Will he tell them what he intends to do about the catastrophe that they face, and when the ban will be lifted? Will he tell them how concerned he is—not so much about consumers, but about the farmer?

Mr. Martyn Jones: I am grateful to Madam Speaker, and to the Chairman of the Agriculture Select Committee, for the opportunity to debate the Welsh Affairs Committee's report entitled "The Present Crisis in the Welsh Livestock Industry"—along with the very good report published by the Agriculture Committee.
Our inquiry was launched in response to the real concerns and problems of farmers in Wales. Welsh farmers were the first to take direct action—which was a sign of their deep frustration, given that they are basically conservative, with a small "c". They threw beef in the sea, and blockaded ports. Such action is not to be condoned, but it should be noted.
The Committee's inquiry resulted from a joint request by the National Farmers Union and the Farmers Union of Wales. We were happy to examine the problem, as we had been asked to do. We had a unique experience in the joint NFU-FUW evidence session. Given the animosity between the two unions in Wales, it is notable that they were able to make such a concise and eloquent case in describing their problems. The phrase "double whammy" was used earlier, but Wales faces a triple whammy: the green pound is affecting sheep prices, dairy prices and, of course, beef prices.
The evidence given by the unions suggested that there might be an element of profiteering among major supermarkets. Market and supermarket prices did not seem to relate. Supermarket prices had maintained their level over the past year and a half, while cattle market prices were plummeting.
The inquiry went from strength to strength. Every time we invited someone to give evidence, that evidence raised more questions than it answered. Eventually, we were asking for evidence from frozen-food producers, meat manufacturers, representatives of all the major supermarket chains in Wales, caterers, the Meat and Livestock Commission and, of course, the Welsh Office. It is fair to say that, on the whole, our conclusions on the beef problem coincide with those of the Agriculture Committee, but I want to concentrate on a subject that that Committee did not cover—supermarket profiteering, or the possibility of such profiteering, if only to enable supermarkets to defend themselves from the challenge.
Our Committee went as far up the food chain as we could. Our broad remit in Wales allowed us to stray into strange areas into which the Agriculture Committee may not have been able to stray. I am afraid, however, that we were still left with more questions than answers. I do not believe that the independent report commissioned by Tesco, which was mentioned earlier, is particularly convincing in its assumption that price spread broadly reflects increased abattoir costs. That assumption is probably not justified, and it certainly should not be tested.
Our conclusion that supermarkets are not profiteering but, on the other hand, not experiencing pain is probably correct; but the Government ought to ask the Office of


Fair Trading to intervene with a full-blown expert inquiry into the meat chain. That is essential if we are to secure the kind of expert evidence, for long-term purposes, that our Select Committee could not have secured without treading on too many other Committees' toes.
There is one example of the Committee's turning its gaze on a problem resulting directly in a good effect. I am sure—the figures seem to bear this out—that retailers, at least, are making real efforts to buy British beef. That must help.
I believe that the various Government measures that have been outlined so far—I am sure that the Minister will say more later—have already helped. Moreover, I am sure that the Government's recognition of the urgent need to lift the beef ban, and the welcome moves that have been made in that direction, bode well for the beef industry in the medium term.

Mr. David Curry: I hope that the Minister will not mind if I refer to two or three items in "Modern Public Services for Britain", on which the Chancellor made a statement today. They are quite important in the context of what we are discussing.
The document from the Ministry of Agriculture, Fisheries and Food is, I assume, the Ministry's mission statement. It does not quite set the pulses racing, but it looks like a mission statement for an eventual department of rural affairs—although I suspect that we shall not have one as soon as we expected. Interestingly, this mission statement does not mention agriculture or fisheries at all; we have moved on to rather grand, vague terms such as "the rural community" and "the coastal community". The word "community" is clearly seeping into every part of parliamentary and political language. We ought to define what is meant by "community"; the term is used very loosely.
I also note, in the context of higher standards of consumer protection, that the charging of meat establishments is likely. I assume that that is what that paragraph means.
I hope that the Minister will clarify a matter that causes me concern and is central to the debate. The review states:
the Government intends to end production-related support for hill farming and replace it with a scheme to maintain the environment and social fabric in the hills.
I am not sure what that means. It then says that that will depend on the progress made on Agenda 2000. I am not clear whether the Government are saying that they hope that Agenda 2000 will give rise to policies that will enable them to end production-related support. Depending on what replaces it, we may support the Government on that. We all want a system that liberates the farmer from dependence on production subsidies, and that assures the livelihoods of farmers by means that are perhaps more acceptable to the wider "community".
I want to know what is meant by that phrase, because it is important to us. Is it a unilateral policy that the Government will introduce, and does it depend on the outcome of Agenda 2000? The crucial question that will inevitably arise is, how will we ensure that measures implemented in the United Kingdom are at least analogous to those implemented elsewhere? The constant perception of farmers is that they receive less favourable treatment than that doled out to continental farmers.
The Government's belief that support in the hills should have no minima makes farmers circumstantially suspicious of the Government's attitude. My constituency in the Yorkshire dales is a less-favoured area, although a large part of it is a national park. Farmers in my area are bound to be preoccupied by those considerations.

Mr. Jack: Did my right hon. Friend find anything in the mission statement about the competitiveness of the beef industry?

Mr. Curry: The mission statement seemed to show the Department's desire to be seen as a Department that supports the consumer. I have no quarrel with that: I believe that it is right. If there are no consumers, there is no point having any producers. However, I would have liked to see that view balanced by remarks about the need to produce competitively for the marketplace, and to secure the social and environment fabric to which the document refers. As in all things political, there is a balance to be struck, and the Government should find out where it lies.
We should look to the future rather than to the past. It is now common wisdom that there will shortly be no intellectual or security justification for the continued existence of the 30-months scheme, because none of the animals coming into the food chain will have consumed contaminated produce. It is important to find a way of introducing that beef into the marketplace so that the consumer no longer believes that it is tainted beef. The danger is psychological. If we are to get people to eat beef—it is actually the better, slow, grass-reared beef: the older animal—we must ensure that we can sell it.
I see that Labour Members have been paged. Perhaps it is to tell them that they are now on a one-line Whip, or to give them some really useful information as opposed to the information that they are usually given via their pagers.
The ban on beef on the bone is important, because it also has a psychological effect. We are reaching the point at which it will be difficult to maintain that the ban is justified in terms of actuarial risk. The Government will probably be delighted to get rid of the ban, partly because they have dug themselves into a hole and partly because they will inevitably have no choice but to ban green-top milk. After all, the actuarial risk of green-top milk is a great deal higher than eating beef on the bone. It would be bizarre if one were to be banned and not the other, especially given that there is such a difference between England and Scotland. It will be interesting to see how No. 10 adjudicates on that problem.
We all want the export ban lifted, but we should not fool ourselves into believing that the act of removal of the ban, when it eventually comes, will represent a golden dawn for the agricultural industry. Those markets will be very hard to win back.
The continental consumer in the most important, high-value market is now conditioned to think of British beef as having a problem associated with it. There is real paranoia in some continental markets. No one on the continent will go out of his way to market British beef to the consumer. The new European labelling regulations, which will be in force compulsorily by 2000, will enable people to display a large notice saying, "Don't eat this beef, it's British", if that is how they want to play it.
There will not be a golden new dawn when the export markets are opened up. There will have to be tremendous political good will to enable that to happen, and British beef will have to be promoted so that people believe that they are getting a good deal.
The fundamental problem we face is the high value of sterling. The problem is not an accident of God: it is a matter of policy. Until the Government define Britain's relationship with the single currency and declare our intention to join it, the pound will remain a volatile currency at a rate that is too high.
Just six weeks ago, people were talking about the fact that the pound was declining, and that it was down to DM2.80 or DM2.70. We had marvellous visions of the pound declining, but it is now back up to the rates that everyone was complaining about before it started to decline. Sterling is set for a volatile career until the Government set out a pathway for Britain's relationship with the emerging single currency. That will affect all industries. Even if the export markets return, the price problem of getting into those markets will remain serious.
This problem does not affect only agriculture, but it does so in particular ways, because of the price determinations in agriculture. That is why the arrangements for the new agrimoney conditions will be important once we get past January 1999 and the single currency is, to all intents and purposes, in existence.
The Government are right to say that everything depends on the outcome of the negotiations on Agenda 2000. Agenda 2000 will not happen in a day. It will be subsumed in the World Trade Organisation talks, which is a more powerful, inescapable instrument of reform than enlargement of the European Union. We want a move away from production-related aid. The Government's position is that there should be compensation for the removal of that aid, which would become degressive. I do not think that that will do the trick.
I want a coherent menu of environmental aids—what the Government refer to as aids to support the social fabric—into which farmers can buy. We talk about the merits of environmentally sensitive areas and countryside stewardship schemes. It would be interesting to know what the costs would be of the generalisation of those schemes to start with, and to what extent those and the equivalent Welsh programmes represent a blueprint into which farmers can opt.
Hill farmers in my constituency and in the constituencies of those Labour Members who have a long-standing reputation for defending the legitimate interests of farmers in disadvantaged areas would be maintained. The consumer would get something that they would be willing to pay for, and we would get away from the confrontational perception of agriculture as a forced tax on everyone else. We need to spell that out soon, or we shall all blather about the conventional wisdom of moving towards environmental aid and no one will set out the mechanics of how this can become a practical, rather than an aspirational, objective.
It is crucial to begin this work, so that we know where we stand. This problem does not affect only upland farmers. I continue to believe that lowland livestock farmers are in the most serious difficulty of anyone

in agriculture. Aid available to hill farmers is not available to them. They depend to some extent on what is happening in the hills, because of the traditional patterns of agriculture in the United Kingdom. They cannot compete with larger lowland farmers, which is the link in the chain that is closest to breaking point. We must face pressing new realities, and whether we like it or not the World Trade Organisation discussions are part and parcel of enlargement. They are inextricably linked.
Farmers will have to come to terms with environmental demands. The reaction against intensification underlies the argument about genetically modified food, which has become the lightning conductor for the wider concern of intensified agriculture. We must be careful that the legitimate concerns about the broader ecological impact of galloping technology do not render farmers unable to take advantage of cost-reducing technology that will help them to become more effective.
Another reality is consumer preference. Whatever our views on supermarkets and on whether they are profitable, those super-powers are in place, and the Orwellian world of competition between them will remain. Most citizens benefit from that, because it guarantees cheap food. Supermarkets are rather like global super-powers, in that we cannot pretend that they do not exist. The President of Mexico said, "Poor Mexico. So far from God, so close to the United States." The farmer might say, "Poor me. So far from the market, so close to Tesco."

Mr. Martyn Jones: The right hon. Gentleman speaks about competition between supermarkets. Is he unaware that their profits are about 7 per cent., whereas in other European countries supermarket profits are about 3.5 per cent.? They may not be delivering what he says they are delivering to our consumers.

Mr. Curry: That is true, but I do not think that continental supermarkets are more efficient than British ones. The hon. Gentleman may go to Calais more often than I do to collect beer, but in my experience British supermarkets are extremely efficient. That is shown by their expansion overseas. There is severe competition between them in the United Kingdom, and, if the margins were lower, the competition would become even more severe.
It will intensify, because Government planning policies, with which I agree because they were started by their predecessors, will make it more difficult to develop out of towns. That will result in more intensive competition for city centre sites, and an increase in pressure to sell more goods in city centres. Farmers do not have to love supermarkets, but they will have to live and work with them. Those are the new realities.
I hope that the Minister will address the issues that I have raised, because they flow from today's document. We could all speak about the incomes of our farmers and about the threat to traditional life in the uplands. However, there has been a structural change, and it is likely to be permanent. Prices will not recover to earlier levels. The market will have to operate in a different way, and that will put immense pressure on the industry. I should like to know how the Government intend, over the longer term of reform, to show some landing lights so that farmers will know where they are. That is probably agriculture's most reasonable expectation, and I have no doubt that the Minister would like to meet it.

Mrs. Janet Dean: I am grateful for the opportunity to take part in the debate, because my constituency not only produces excellent beer—a product mentioned by the right hon. Member for Skipton and Ripon (Mr. Curry)—but covers a large area of rural Staffordshire. The hon. Member for Mid-Worcestershire (Mr. Luff), the Chairman of the Select Committee on Agriculture, said that we should not go over old ground, that the debate should start from today. That is impossible because, as some hon. Members have said, the issues go back to the BSE crisis, and many of them are intertwined.
Since before I was elected, I have been aware of the unprecedented difficulties of farmers. I was brought up on a farm, and I know that farmers have always had to cope with the day-to-day problems of our changeable climate, and with epidemics such as foot and mouth disease. However, nothing compares with their problems over the BSE crisis.
Time and again, the previous Government failed to tackle BSE. Their record was one of continual failure. The announcement on the fateful day of 20 March 1996 of the possible link between BSE and new variant Creutzfeldt-Jakob disease caused great fear among farmers attending my local cattle market in Uttoxeter. However, the announcement did not clarify the situation or define the measures that would be needed to tackle the problem and protect the public. Those first few days of uncertainty exacerbated public concern about the safety of beef. Sadly, the previous Government went on to blame everyone but themselves for the crisis.
I welcome the report by the Select Committee on Agriculture, and above all I welcome the Government's response to it. The report shows that the Government have worked hard over the past 14 months to restore confidence in British beef, to find a way to lift the export ban and to ensure that British beef is as safe as any. I have had regular meetings with members of the National Farmers Union branches in Burton and Uttoxeter. Throughout the months since the election, they have expressed their concerns to me. Of course they continue to struggle because of the drop in farm gate prices resulting from the high value of the pound, and they are greatly concerned about the industry's future and the uncertainty.
My farmers appreciate the work of Ministers, especially in negotiation with our European partners. Burton NFU members asked me to pass their thanks to the Minister for his efforts in negotiations in the European Union, and they expressed their appreciation of the fact that the Government are to provide initial funding for the cattle traceability scheme and specified risk material controls.
Many issues that were raised with me and which are raised in the Select Committee report have been addressed by the Government. Of course there is still concern. Farmers in my constituency want a level playing field so that they are on a par with their European neighbours, and they do not want to carry the bulk of the cut in EU capacity. They remain concerned about the difference between wholesale and retail prices.
Uttoxeter NFU members conducted a study which showed a wholesale price of 90p a kg. That compared with £13.49 a kg in local supermarkets and £8.47 a kg for a similar cut from a family butcher. There is obviously a great difference between the price of meat from a local butcher and that from a supermarket, and an even greater difference between those prices and the wholesale price.
Farmers recognise the need for restructuring agriculture, and for a retirement scheme that will allow older farmers to retire with dignity and does not discriminate against women farmers. I am grateful to Ministers for their consultations on the European Union early retirement scheme. I hope that there is a satisfactory outcome.
There have been some traumatic years for agriculture, and there has been a knock-on effect on associated rural and urban industries. I welcome the Government's progress towards a complete lifting of the beef ban. I hope that our European colleagues will continue to work with Britain to ensure that British farmers have a level playing field, and that the lifting of the ban proceeds in accordance with scientific evidence and is not delayed because of any national self-interest. British farming has suffered much, but the quality of its products and the determination of the British farmer will win through. They will be supported by a Government who have worked steadily towards establishing safety and confidence in British beef.

Mr. John Hayes: I am sorry to start with a negative comment, but I cannot agree with the hon. Member for Burton (Mrs. Dean) about British farmers' faith in the halcyon new age and the marvellous new Government who have done so much for them. That view is certainly not shared by the farmers I meet as I travel around my constituency and more widely.
Of course, the crisis, which has been described by Labour Ministers as the worst crisis facing agriculture for a century, is not entirely a result of what has happened over the past 14 months, and it would be foolish to pretend otherwise. Of course BSE is a major factor in the problems facing the beef industry. That is implicit in any discussion about the industry.
I shall identify 10 key points that are a direct result of matters that have arisen over the past year. I shall try to cover those points a little more speedily than my hon. Friend the Member for North Wiltshire (Mr. Gray), who took us on journey round the livestock markets and shows of Great Britain, or the hon. Member for Shrewsbury and Atcham (Mr. Marsden), who took us on a journey from false logic to science fiction.
The first point is that farm incomes have fallen in the past year. There may be history to that, but in livestock terms, farm incomes have fallen by 62 per cent. in the past year. Throughout that year, the Government have claimed to be making great progress in their support for British beef.
Secondly, the strong pound is a direct result of Government monetary policy. The hon. Member for Forest of Dean (Mrs. Organ) tells us that that is something to do with the Government, but it is also the result of other factors over which the Government have no control. The truth, however, is that we have had two Budgets that have failed to stimulate savings and control consumer spending.
Interest rate authority has been passed to the Bank of England, which has used that authority to raise interest rates and maintain an artificially high pound. That has had a dramatic effect on the ability of our farmers, like all other manufacturers, to export. The high pound can be attributed only to the Government's failure to grasp the economic issues that surround it.
The third issue is that no serious attempt was made during the British presidency of the EU to deal with CAP reform. Despite the rhetoric, when Britain held the presidency CAP reform was relegated so far that it fell off the end of the list.
Fourthly, there has been no genuine progress on the lifting of the export ban. Granted, it has been lifted in the case of Northern Ireland, but that is pitiful after 14 months, when Northern Ireland never had a case of BSE anyway. Let us not forget that, when the current Government were in opposition, in 1996, they spoke about a firm timetable for an immediate lifting of the ban. The previous Conservative Government were criticised at the end of 1996 for not achieving a lifting of the ban.
At one of his first Question Times at that Dispatch Box, the Prime Minister promised us early progress. That was more than a year ago. Since then, there has been the paltry lifting of the ban in Northern Ireland. Welcome as that is, it is paltry when set against those high targets.

Mr. Gray: Will my hon. Friend give way?

Mr. Hayes: Very briefly, as long as we are not going back to Chippenham.

Mr. Gray: I shall happily take my hon. Friend back to Chippenham some time, if he would like to come with me. He might learn a thing or two. Will he pay tribute to our erstwhile right hon. Friend, Lord Mayhew, who put in place the negotiations that led eventually to the lifting of the ban in Northern Ireland?

Mr. Hayes: Indeed, an excellent point. The truth is that the lifting of the ban in Northern Ireland would have happened—

Mr. David Taylor: rose—

Mr. Hayes: I shall give way, as the hon. Gentleman is such a fine chap.

Mr. Taylor: The hon. Gentleman stated that there had been no cases of BSE in Northern Ireland. My information is that there have been 1,770 such cases. Would he care to correct that?

Mr. Hayes: I am delighted to bow to the hon. Gentleman's superior knowledge in these matters. He is an extraordinary authority on all affairs Northern Irish. I shall qualify my remark by saying that no one would have expected the Northern Ireland ban not to be lifted, regardless of Government policy and regardless of which party was in government. To herald that as a great sign of progress and the result of Government policy is a fallacy.

Mr. Rooker: rose—

Mr. Hayes: No, with the greatest respect to the Minister, I shall not give way again. I said that I would make 10 points quickly, and I have made only four.
The fifth point is that there has been no firm guarantee of the necessary marketing support that will be required, once the ban has been lifted. As we have heard,

enormous support will be required to assist with marketing, to re-establish confidence in the European marketplace, yet we have had no firm guarantee, in the form of facts and figures, from Government.
The sixth point is that there has been a fall in beef prices while the Government have been in office. That may have been part of a more general trend—I shall deal with restructuring in a moment—but there has been an explicit fall in beef prices, which I suppose brings us back to the issue of the strong pound.
The seventh point is the Government's failure to apply for agrimonetary compensation. When people speak of the Fontainebleau protocol, perhaps they should remember that its terms mean that the rebate that we were receiving, which is collected and used by the Treasury for all sorts of purposes, could well have been allocated to support agriculture during this difficult time, quite apart from the money that would have been claimed back under the European scheme. There is no real excuse for not claiming that.

Mr. David Taylor: rose—

Mr. Hayes: No—no double whammy.
The eighth issue is the cut in hill livestock compensatory allowance. Given that 70 per cent. of beef farmers are in less favoured areas, they are particularly hard hit. As hon. Members will recall, the Select Committee report paid particular attention to the plight of tenant farmers. Tenant beef farmers are probably the worst affected of a badly affected industry, yet there have been cuts in support to them under the current regime at the Ministry of Agriculture.
The ninth point is beef on the bone, which is self-explanatory. I need say no more about a policy that was considered ludicrous by everyone, with the possible exception of the Minister and his cohorts.
The 10th point is the style and approach of the team at MAFF, which has found so little favour with farmers and all those associated with the rural economy. For any Government to have stimulated a countryside rally, as this Government did after a few months in office, is a sad testament to the regard in which they are held in rural Britain.
In conclusion, I shall deal with the issue of restructuring. Much has been said about the over-production of beef in Europe. It is true that supply outstrips demand. The Select Committee examined the matter carefully. We are told piously by the hon. Member for Shrewsbury and Atcham that we must restructure because of over-supply, but the restructuring must be Europe-wide.
At present, purely for market-driven reasons, Europe is obliging Britain to restructure—in other words, for beef producers to go out of business—so that European beef producers can continue to thrive, prosper and supply the market, such as it exists, across Europe. It is unfair and unreasonable for Great Britain to bear the brunt of European restructuring to bring supply in line with demand.

Mr. Paice: Does my hon. Friend agree that we may need to restructure and deal with the over-production of beef in Europe, but that an early retirement scheme to


reduce the number of producers will not necessarily lead to a reduction in production levels—indeed, it is possible that, with greater efficiency on larger-scale units, production could rise as a result of such restructuring?

Mr. Hayes: My hon. Friend is right. That matter was addressed by the Select Committee, which agreed that the Government had no strategic view of the British beef industry. They had no notional view on the number of producers or the amount of production. Those two things, as my hon. Friend says, are quite different, but it seems that the Government do not have a business plan for either.
The Select Committee—a cross-party group—acknowledged that there was no strong sense that the Government had a two, three or five-year plan for British beef. If we do not have a strategic long-term view—a business plan with notional figures, measurables and targets—for the number of producers and the amount of production, we are unlikely to instil confidence in our beef producers, let alone in the European markets that we need to open up again if that industry is to prosper.
I promised to be brief, but I have been a little longer than I intended because of some interesting and telling interventions, mainly from my hon. Friends. Specific questions need to be answered. The first is whether the Minister will answer the question about the relationship between the winding up of the over-30-months scheme and the explicit link to the data-based exports scheme. What about progress in Europe on those specific discussions? Will the Minister come clean about the noises being made currently, questioning the viability of our traceability package, which seem to signal continued prevarication and unreasonable response from Europe?
Will the Minister be explicit about the further, and in my judgment necessary, financial support that the Government will offer the beef industry, not for early retirement, but on a positive note to support the industry and to go out and sell the products in the wider world? What package will the Minister reveal to the House to support and market British beef—the best beef in the world—to the rest of the world?

Mr. Alan Hurst: I am delighted to follow the hon. Member for South Holland and The Deepings (Mr. Hayes). He put me in mind of a certain type of constituent: when one acts on someone's behalf and has a minor success, one writes to them expecting perhaps a modicum of praise; one waits for the letter, and when it comes, it says, "Thank you very much for your help, but it should have been quicker. By the way, I have another problem." The hon. Gentleman gave grudging and scant praise—the word "praise" is probably an overstatement—for the substantial steps that the Government have taken to overcome this serious problem.
The hon. Gentleman and other hon. Members serve with me on the Agriculture Committee, under what appears to be the almost sanctified chairmanship of the hon. Member for Mid-Worcestershire (Mr. Luff). One of the witnesses who came before the Committee was my constituent Mr. Peter Hawes, of Shalford Green. He is a beef farmer and gave a moving account of the hard work and risk facing beef farmers and of their current financial plight. He carried the extra burden of being a tenant

farmer. He said that the value of his herd had diminished by 50 per cent. over three years. That herd is his asset—his capital.
The freehold farmer is in a bad position, but not in as bad a position as the tenant farmer. I do not know whether hon. Members understand the agriculture property market, but it bears no relationship to the real value of the land. It goes up and down, presumably on a speculative basis, rather like the stock market. Neither of those amazing institutions relates to the commercial worth of the commodity. Tenant farmers cannot take advantage of the vagaries of the agricultural property market. If the price of a herd goes down, such farmers often come close to ruin. They may have borrowed from a bank on the security of the herd and, as the livestock market goes down, the bank sees the value of its security go down. Such people are the most hard pressed.
History has been referred to. The hon. Member for Mid-Worcestershire said that he did not want to discuss history at all, and my hon. Friends the Members for Burton (Mrs. Dean) and for Forest of Dean (Mrs. Organ) wanted to deal with modern history. I do not want to go back to ancient times, but it would be helpful to consider beef over a longer time than just the past three or four years.
All the evidence shows that beef consumption in these islands has declined by about 50 per cent. since 1950. That is a substantial decrease, and it has taken place notwithstanding the advent of BSE and the introduction of the hamburger. Take hamburger consumption out of the equation and, by golly, there has been an absolute collapse in beef consumption since 1950.
There are several reasons for that and I need not detain the House by discussing them in detail; whatever policies are followed, however, the restoration of confidence in beef must be the prime consideration. People talk about over-production, but we could equally talk about under-consumption. The Government have been helpful in stimulating public awareness of the safety of British beef. They have committed sums of money and set up programmes that have helped in that way. We can never do enough.
My swan-song speech—if I may mix my animals—at Essex county council was about urging that council to restore beef to school menus. I am pleased to say—I do not take all the credit for this—that that has now happened, and I believe that other councils are moving in that direction. When we have proved beyond doubt that we have an entirely safe product for anybody to eat, it is absurd that it should remain banned in public institutions over which we have any influence. I am pleased that my county has taken a step in the right direction.
I want to enter a word of controversy on beef on the bone. Whatever the statistics relating to the risk—I believe that it is slight and that it might be easier to catch a flying fish in Rochdale than to be infected by eating beef on the bone—the point we must consider is confidence. The banning of beef on the bone was about confidence. It was one more step to show that we are prepared to do anything that is necessary to protect the public and to restore public faith in British beef. It may be a coincidence, but since the prohibition took effect last December, domestic consumption of beef has risen.
We all talk about our beef farmers as if we were proprietors in some way. The beef farmers I speak to in my division do not appear to be obsessed with beef on


the bone. They want the reopening of the export markets and they want understanding, which I believe they are getting from the Government, about their difficulties in the foreseeable future. When the BSE crisis ends, there is the danger of a glut in the market. That is why we should not wait to re-establish the domestic market. However, there is no point in maintaining the domestic market if, at the same time, it is flooded with imports that take up that demand.
I shall conclude by narrowing my speech to a plea that we should redouble our efforts to promote British beef, not only as a wonderful product but as an entirely safe product which we should be proud to talk about, and which we should all encourage all and sundry to eat.

Mr. Elfyn Llwyd: It is obvious to all of us in the Chamber and beyond that there is a deep crisis in agriculture in the United Kingdom. It is also obvious to Welsh Members that the crisis is deeper in Wales. For example, in my constituency it is estimated that one family in five is in some way connected with agriculture. The loss to the various rural economies of Wales is extremely deep.
Some weeks ago I had the privilege of conducting some research in Dyfed with the Select Committee on Welsh Affairs. I was astonished by what I heard. I shall preface my remarks by saying that, when a nuclear power station was closed in my constituency, there was gloom and doom and talk of economic disaster. That closure involved a loss of £10 million per annum to the local economy of south Meirionnydd. I was astonished to hear that, because of the current collapse of the milk price, no less than £9 million per month is being lost in the old county of Dyfed. One should try to imagine the effect that that is having on local businesses and on the structure and—to use a word used earlier—the fabric of rural life. It is an absolute crisis.
The hon. Member for Clwyd, South (Mr. Jones) mentioned double or triple whammies. We have a beef crisis, and—because of the strength of the pound—a lamb crisis. Moreover, the milk price has collapsed completely. As all hon. Members are aware, there is a complete crisis whose existence only a fool would deny.
The House should be questioning supermarkets' role in the crisis. It is often said that bank managers are quite ready and willing to lend one an umbrella, but that they will want it back when it rains. I am beginning to wonder whether supermarkets have been entirely forthright with their customers and with Select Committees. I am absolutely certain that, in the past couple of years, they have not been very discerning in the way in which they have sourced their meat. They have a lot to answer for. Supermarkets have used the perceived unpopularity of British beef to fill their shelves with rubbish from abroad. Although I am not anti-European or against any foreign country, I am sure that Welsh and other British beef is the best, safest, cleanest and generally healthiest available.
I readily admit that I am not an economist. Nevertheless, I cannot understand who on earth is making any money when producers and abattoirs are being paid less and supermarkets are selling at a loss. Businesses have been mentioned in this debate. Before I was elected

to the House, I had a business and employed 28 people, so I am not completely ignorant of business practice. I have to question the role played by supermarkets in the crisis, however.
Representatives of one supermarket chain appeared before the Welsh Affairs Committee, and said—with a straight face—"Yes, we are losing money. We have been losing money on meat for the past two years." I am not gullible, and I am not completely convinced that that is the case. Although I understand the idea behind loss leaders and realise that some supermarkets have over the years sold milk at a loss to bring in customers, I do not accept that that applies to meat.
When questioned, representatives of one chain store—including an army of economists and other experts—could not answer simple questions from people such as me. Although I do not understand accounts very well, I had to ask about columns marked "miscellaneous" on the expenditure side. The hon. Member for Monmouth (Mr. Edwards) nods; perhaps he recalls that exchange. The experts could not reply to our questions and did not know what the miscellaneous expenditure comprised. However, curiously enough, that expenditure was precisely the thing that tipped the balance and made it unprofitable to sell meat. I shall leave the matter there.

Mr. Oliver Letwin: I have a great deal of sympathy with what the hon. Gentleman is saying. Does he agree that a most helpful statement on a related matter that the Minister could make today—his doing so would cast light also on the beef issue—would be to ask the Monopolies and Mergers Commission specifically to investigate both the retail and the wholesale sides of the milk market?

Mr. Llwyd: I fully agree with the hon. Gentleman. That market also is a very great concern, and I urge the Minister to deal with that matter in his reply. Huge swathes of rural areas in the United Kingdom are under extreme pressure. His point was well made.
The Welsh Affairs Committee concluded that there was a very strong case for an in-depth independent study of the retail pricing of meat products to be conducted. Perhaps the Office of Fair Trading could conduct such a study and really delve into the matter, to establish the exact nature of the problem and whether we are being informed of the true situation. Our report stated that research commissioned by retailers—however impartial it may be—will not be convincing.
Ironically, at the same time as we are dealing with the retail problem, producers' bargaining power is being limited—indeed, greatly weakened—because of the development of so-called producer clubs in which farmers sell animals straight from the farmyard. As soon as a sufficient number of farmers have joined such clubs, cattle auctions will close and a near-monopoly will be established, directly affecting prices. The hon. Member for Forest of Dean (Mrs. Organ) mentioned those points, and I fully agreed with her.
Earlier today, there was a lobby in the other place, in the Attlee Room. I should like to apologise—I cannot apologise any more publicly than in Hansard—for not being there. [Interruption.] I was waiting to be called. The lobby was advocating that we should ensure that we keep our cattle auctions and a reasonable price floor, both of which are extremely important.
Let us not make any mistakes about the matter. Even if the ban is lifted tomorrow—I hope that it will be lifted very soon—the market will not recover overnight. Sterling's strength has already been mentioned in this debate, and I shall not deal with that issue again. However, we have also lost markets to other producer parts of the world. The loss of those markets should bring home to the Minister the importance of marketing. Marketing is key, and it is vital that we get on with it as soon as possible. Improved marketing is how we will recover our markets in the medium term.
A few weeks ago, I had the privilege of meeting the Austrian and Irish ambassadors, as part of a programme initiated by Plaid Cymru to try to urge our colleagues on the European mainland to help in lifting the ban and getting things moving. I was pleasantly surprised when not only those ambassadors but others said, "You in Wales, rural England, Scotland and Northern Ireland have an excellent product. You have a truly green product that is properly reared. But people in Europe don't realise that."
The Austrian ambassador said, "Welsh, English, Scottish and, of course, Northern Irish branding is very important. You could split it up in that way." She said that some small Austrian valleys produce one type of cheese, whereas neighbouring valleys produce a completely different brand. All their products are to serve a discerning market. We have to emphasise such branding and markets in developing our marketing strategies. However, I agree also that—as has been said in this debate—we have to encourage everyone in Britain to insist on home-produced meat.
We have been told that red meat consumption has been declining. We will therefore have to diversify our products and put more value-added products on the shelves.
I ask the Under-Secretary of State for Wales, the hon. Member for Bridgend (Mr. Griffiths) when the all-Wales environment scheme will come on line. Although the scheme was—rightly—much trumpeted in last year's royal show, we are still waiting for it. There have been no details about it. May I urge him, with respect, to ensure that the scheme is financially attractive to farmers. If it is not attractive, it will wither on the vine and be of absolutely no use. I am sure that that one small step could be taken.
In opening the debate, the hon. Member for Mid-Worcestershire (Mr. Luff) said that the Agriculture Committee had been very successful because at least two of its recommendations had been implemented while the report was at the printers. The report perhaps should be included in "The Guinness Book of Records". Alas, the situation has not been the same with the Welsh Affairs Committee's report. We said in our report of 12 May:
There is immediate need for emergency aid to enable farmers to survive.
We await that emergency aid. Nothing has appeared so far, although the crisis is deepening daily. I urge Ministers please to do what they can to get the industry and the Government moving, because there is a crisis.
We have heard much about agrimonetary compensation. Although it is true that a sum has been drawn down from Europe, more could be drawn down. I fully understand the Fontainebleau protocol, which—when boiled down into ordinary people's

language—means that 71p in each pound of compensation will have to be paid by the British taxpayer. I tell British taxpayers that the whole of the UK's rural economy is suffering a real crisis. I am sure that British taxpayers could be persuaded that the help that is needed should be provided. A crisis deserves crisis management or an answer that solves the crisis. Simply saying that the taxpayer will not accept something is no answer at all.
Some weeks ago I was at Ysbyty Ifan in my constituency to speak to a group of young farmers. There must have been in the region of 40 or 50 youngsters there. Incidentally, Ysbyty Ifan is probably one of the most Welsh villages in Wales. It is a very well established community that goes back many centuries. I was speaking about life on the Westminster farm which can be pretty dirty, although it is clean this evening—at least, I do not have my wellington boots with me tonight.
A youngster of 14 or 15 had a piece of cake and a cup of tea with me. He told me that his parents, their parents and three or four generations of his family had farmed in Ysbyty Ifan. This youngster, in my presence and in the presence of 40 or 50 other people, had tears in his eyes when he asked what the future held and whether I thought that he and his little brother would be able to take over the farm. I said that I was sure it would all come right, but that it would need much hard work.
The Minister of Agriculture is not here today, but with all due respect—I do respect him—his response to the crisis has not been worthy of him. He may be constrained by the Treasury or by something else—I know not—but I think he could have done more. It is no use sitting on the fence any longer. I know that something has been done, but it is not enough. I plead with Ministers, because the clock is ticking. We need to get things moving as soon as we can. If more is not done in the short term, the electorate will be confirmed in their view that new Labour either does not understand rural life or does not care. I am not sure which is worse.
The time to act is now, and I urge the Under-Secretary of State for Wales, the hon. Member for Bridgend and the Minister of State, Ministry of Agriculture, Fisheries and Food to act on the recommendations made by both Select Committees. Let us move forward in concert and get the industry back on its feet for the sake of all our rural areas.

Mr. David Drew: In the spirit of the debate, I shall keep my remarks brief, so that everyone who wishes to contribute has the opportunity to do so.
The introductory sentence of the report by the Select Committee on Agriculture is prophetic, not to mention stark:
The beef industry in the UK is in a critical condition, because of the BSE crisis, the strength of sterling and the long-term decline in consumer demand.
The first two of those three reasons have been well rehearsed, but it is worth reminding the House that the cost to the Exchequer, as outlined in the National Audit Office report, will be something over £4 billion by 2000. Even on the day that we heard about the comprehensive spending review, that is a seriously large figure.
Another aspect of the problem is the loss of sales. In the United Kingdom alone, at the peak of the crisis there was a 30 per cent. fall in sales. Overnight, the introduction


of the beef ban, not only by the European Union but by other interested parties, led to some £500 million in exports being lost. However, the real impact of the crisis, which has taken up most of the debate, is the cost to individual producers.
We all know that there has been a massive fall in farm incomes. Labour does not hide from that fact. Indeed, my hon. Friend the Member for Burton (Mrs. Dean) waxed lyrical in explaining exactly what that fall means, and Opposition Members highlighted how the industry has faced the decline, even though it has been difficult.
The strength of sterling has also been well documesnted. Although we could argue with the analysis of Opposition Members, what sticks in our craw is their rhetoric. It is easy to outline the problem, but they offer no solutions. We all know that the problem with the pound at the moment is that it is being used as a hedge against the euro, whether the euro works or not, and that is something we have to face. Whatever the Government's strategy, the euro debate will be held in due course, and we shall continue to face the problem of the rising value of the pound until there is clarity on all sides of the debate.
I shall speak briefly about the third reason for the crisis, as identified by the Select Committee. It has been mentioned, but it is difficult not to underestimate it—it is the changing nature of the beef industry itself. On the one hand, beef producers feel sore and are asking for more support. On the other, the Government—and, to be fair, the previous Administration—have put considerable resources into the industry to support it.
There have been several initiatives: the over-30-months scheme, the cull, the calf processing aid scheme, agrimonetary compensation drawn down at Christmas, help in setting up the cattle traceability scheme and the decision not to pass on the specified risk material control costs to the industry. Specific help to, for example, the hill livestock compensatory allowance areas, and help with marketing via the Meat and Livestock Commission, have always been part of the support that the industry has received from Governments of all colours. That help continues to be offered, but, as the Select Committee makes only too clear, we are considering an industry that is experiencing long-term change, if not decline. We cannot hide from that.
It is good to hear that the consumption of beef is recovering. We can play about with the statistics, but in terms of agricultural output, the beef industry is of greater importance in this country than the EU average. That puts the matter into context, but there has been a fall in the consumption of red meat for a long time. Consumer tastes are somewhat fickle. I was pleased to hear the right hon. Member for Skipton and Ripon (Mr. Curry), who is no longer in his place, mention consumer resistance to genetically modified organisms and to the use of antibiotics for livestock. Consumers are increasingly aware of what they are being asked to buy, and if they do not like something, they will not purchase it. We cannot escape how those factors have affected the industry.
If one reads all the documentation that has become available, one cannot but be confused about how the food chain operates for the beef market. It is convoluted and difficult to understand, and perhaps change is long overdue. We do not have to go as far as the hon. Member

for Meirionnydd Nant Conwy (Mr. Llwyd) suggested—he spoke about producer clubs—but we can nevertheless understand that rationalisation of the industry is long overdue.
It is good to see the symmetry between the Government's response and the Select Committee's original report. Often, a Government's response and the recommendations of a Select Committee are at variance, but that is not so in this instance, which has already been mentioned.
There has been a lack of progress in one respect—it has nothing to do with the Government, but is connected with drawing down money from Europe—and that is the retirement scheme. As has been said, greater efficiency will not solve the problem, as it could result in increased surplus production of beef. Many producers simply want a way out, and they should be allowed to retire gracefully. We hope that others will come into the market as it recovers.
Two further considerations should be borne in mind. The first, which has been touched on in the debate, is the overall price of food. I am not frightened to say that the price of food has probably bottomed out. We cannot combine quality and price reduction. We learned an awful lesson from the BSE crisis. We drove down prices to such an extent because of the belief that imports could be reduced, and we have borne the consequences.
The second point, which is linked to the first, relates to the structure of the food business. There is a need for producers, middle persons and retailers to work together, but there also has to be a level playing field. Reference has been made to the Tesco-sponsored report by London Economics. One can be sceptical about the final report, but there is obviously an element of truth in the finding that there is not excessive profit making, as additional costs have had to be borne by all elements in the food industry, not least in food preparation. I visited my local Co-op supermarket—and I am a Co-operative Member—where I saw the care and quality that go into food preparation.
In conclusion, it is important that we take into account all those important factors. The Select Committee has produced a good report to which the Government have responded, but we must look for long-term change in the industry, and I believe that it will happen.

Mr. Huw Edwards: I am grateful for the opportunity to speak in the debate, which has been well informed and based on two authoritative reports. I am a member of the Welsh Affairs Committee, which produced a report on the crisis in the livestock industry in Wales. I congratulate my hon. Friend the Member for Clwyd, South (Mr. Jones), who chaired the Select Committee. We interrupted another inquiry in order to undertake this one, and we worked on it for six months to produce an authoritative report that criticises much of what has been going on. It is an honest report, and I commend it.
I gave a presentation on the Select Committee report to the National Farmers Union in Monmouthshire recently. There is a significant farming interest in my constituency. Indeed, farming is probably the largest single industry in Monmouthshire. I am also grateful for the briefing material that the NFU and others have supplied.
All but two of the hon. Members on the Welsh Affairs Committee represent constituencies with significant farming interests. We took evidence from the main farming unions and from the Welsh Office. I am grateful to the Under-Secretary of State for Wales, my hon. Friend the Member for Bridgend (Mr. Griffiths), for listening to the debate this evening. We also had the opportunity to question the supermarkets—Tesco, Sainsbury, Safeway, the Co-op and Marks and Spencer. We tried to reflect the concerns of farmers in our constituencies about what was happening in the supermarkets and the allegations of profiteering.
Having heard the evidence—sometimes in confidence—we remained unconvinced. I do not wish to make accusations, although I know that they have been made against Tesco, which claimed that it has not made any money from selling meat for five years. Tesco will shortly be opening a new store in Chepstow in my constituency, which is welcome. The Tesco distribution centre in Magor employs 400 people, many of whom are my constituents, so I do not want to join the bandwagon criticising certain supermarkets.
The Select Committee made a number of visits to food producers in Wales and obtained a considerable amount of evidence. We looked into the crisis affecting farmers, the meat supply chain and the changing relationship between producers, prices and imports. We discovered that, if there is a crisis in the United Kingdom industry, it is worse in Wales. The decline in farm incomes has been 37 per cent. in the United Kingdom and 44 per cent. in Wales. The Select Committee concluded:
The prices that farmers get for their animals has fallen dramatically… prices now barely—and in some cases do not—cover the cost of production. Cattle prices in Wales have fallen by 30 per cent. in two years and lamb by 39 per cent. The price of milk has fallen by 17 per cent. in a year.
Welsh agriculture is dominated by livestock production. The beef, sheep and milk sectors account for 87 per cent. of the gross output in Welsh agriculture and 80 per cent. of Wales is designated less-favoured areas where 40 per cent. of farms returned incomes of under £10,000. One in four jobs in rural Wales are in agriculture, and for each job in agriculture there are four to five in related ancillary industries. Farming is at the heart of Welsh life and at the heart of Monmouthshire life.
The Select Committee stated:
It is no exaggeration to suggest that much of Welsh agriculture will be destroyed within a decade unless urgent action is taken to reverse the decline.
We took evidence from the Meat and Livestock Commission, which showed that the price spread for British beef increased from 48.6 per cent. in 1996 to 54 per cent. in November 1997.
We concluded that the industry is in crisis, and in Wales it is harder hit than elsewhere. The crisis strikes at the heart of Welsh rural life. We do not condone the violence that occurred in some of the ports, but we sympathise with the frustration that led to it. The Select Committee called for immediate help, to enable farmers to avoid bankruptcy. On the basis of the available evidence, we could not tell whether supermarkets were profiteering, but there was some scepticism about the costs that they claimed were being borne in the retailing of meat.
The Select Committee recommended that the Government should aid the long-term development of the meat industry. We were particularly concerned to find

that there was no freezing facility in Wales. Frozen food manufacturers claimed that they got all their lamb from New Zealand because they could not get the quantity or quality that they required in Wales. If Wales has an abundance of anything, it is certainly lamb, but the frozen food manufacturers are not using it because there is no freezing facility in Wales. I urge the Government to consult other organisations and bodies to find out whether that is an important aspect of rural economic development.
I welcomed the Government's announcement before Christmas of £85 million for Wales. It was more than some of us had feared it might be, but it was not as much as many of us had hoped. Some of the farmers in my constituency have received very little of that money. The Government's paying the start-up costs of the cattle traceability system has been welcomed, as has the fact that the charges for specified risk material will not be borne by the industry.
The introduction of the beef labelling scheme to ensure that beef is not inaccurately labelled, and the establishment of the Food Standards Agency, have also been welcomed, as has the lifting of the beef ban in Northern Ireland. I urge my right hon. and hon. Friends who will be involved in the negotiations to do their best to ensure the lifting of the beef ban as soon as possible.
The Select Committee recommended that more could be done to satisfy the demand for organic produce and to help farmers form co-operatives, and that the lack of a freezing facility for lamb should be remedied.
Tonight there is a reception on behalf of the livestock auctioneers and markets. There are two livestock markets in my constituency, in Abergavenny and in Monmouth. They are part of the culture of those towns. I should hate to see them lost, especially to new supermarkets, as that would make the situation worse. Next week, my hon. Friend the Member for Clwyd, South and I will be attending the royal Welsh show along with other right hon. and hon. Members.
We cannot deny that there has been a crisis, and we urge the Government to do more. I hope that the worst is over, but I fear that that may not be the case. If the Government can ensure the lifting of the beef ban and the value of the pound declines, I hope that we shall see a future for our industry, especially the small family farms in Wales.

Mr. Michael Jack: This has been an extremely good debate, with the House of Commons on its best behaviour debating well-informed Select Committee reports. I congratulate all right hon. and hon. Members who have made informed contributions to this serious subject. Anyone standing at either Dispatch Box must take seriously what the Select Committees have to say about an industry that, as my hon. Friend the Member for Mid-Worcestershire (Mr. Luff) said in his excellent opening remarks, is worth some £1.7 billion.
Beef is a serious industry. It is crucial to the United Kingdom's rural fabric. As the two reports acknowledge, its difficulties cannot be ignored. The Meat and Livestock Commission has told me that 327,000 people are employed on holdings on which there are cattle. The importance of the beef industry should not be underestimated.
I am glad that my hon. Friend the Member for Mid-Worcestershire drew attention to the fact that the measures taken against BSE—the problem that underpins the crisis in the beef industry—were aimed at protecting public health. Before the awesome announcement on 20 March 1996, the previous Government had maintained beef markets in Europe open, with expenditure of £240 million, as the National Audit Office report reminds us. Only after that did new science illustrate some of the problems, and the cost of BSE rose towards £4 billion. That money was not shovelled into farmers' pockets and did not make them rich. Perhaps some of it could have been spent better, but the need to act quickly in the interests of public health drove the policy of the previous Government.
I was interested in the Government's reply to the Select Committee. Some hon. Members have talked about the asymmetry between it and the Select Committee report. I was saddened by the lack of vision, passion or enthusiasm for the beef industry in the Government's cold words. When I talk to those involved in the livestock industry, their passion and commitment comes through. It is their life. The BSE crisis has been one of their most traumatic experiences. They have seen many good animals that they have raised go to slaughter. That has not been easy. The Minister has referred to that many times, and I pay tribute to him for doing so.
Like my hon. Friend the Member for North Wiltshire (Mr. Gray), I have spent time with beef producers in preparing for the debate. I should like to repeat the questions that they are asking. I asked them what they wanted to know from the Government in response to the Select Committee. They want information about the lifting of the beef ban, a clear indication on the calf processing scheme, some guidance about the over-30-months scheme, answers to queries about the operation of cattle passports and, above all, a clear statement from the Government of their confidence in British beef.
Reference has been made to 70 local authorities—of which 64 are Labour-controlled—that are not serving beef. That shows the job to be done. When I rang Birmingham city council's direct service organisation—I thought that the Minister's influence would move his council—I found a schizophrenic situation. I was told that the council had made no decision to approve and endorse the serving of beef, but in pursuit of better value the direct service organisation was going to try to reintroduce it to schools. That is just one local authority. When I asked whether it would help if the Government made an announcement that would help to boost confidence, the clear answer was yes.
I appreciate that the MLC has a vital task in rebuilding confidence in British beef and helping to turn back the tide of declining beef consumption. Whatever the Minister and the Minister of Agriculture, Fisheries and Food can do to help reaffirm the safety of British beef will be a service to all the farmers, I have met and, to the beef industry.
Raising the beef ban must be the number one issue. I know that the Government have been working hard to get other European heads of state to agree that the Florence requirements—an agreement that the previous Government negotiated—have all been implemented.

I wrote to the other 14 member states to find out what the barriers were. I wanted to show them that we have done everything we have been asked to do, and to know why they do not agree to the lifting of the ban.
Sadly, some of the comments in the European press made by people in France and Germany when the Commission agreed that we had met the requirements and that the ban should be lifted leave me with a nagging worry about how long other Governments will keep up the pretence that we have not done all that we have to do. In an article entitled "Vache Folle" in Le Monde on 11 June 1998, a French Minister was reported as saying that the French Government would examine the proposal to ensure that the safety first principle of the Florence agreement was respected. What on earth does he mean by the safety first principle and respecting it? I thought that we had done everything.
It would be helpful if the Minister could tell us where we stand. I share the concern of other right hon. and hon. Members that not until the German elections are out of the way will we stand the remotest chance of getting the ban lifted. The CDU representative, Mr. Boge, who chairs the German Parliament's BSE investigation committee, was reported in the Frankfurter Allgemeine Zeitung as wanting BSE exterminated before he would contemplate the lifting of the ban. Sadly, there is still scepticism among our continental partners, despite the huge efforts that have been made.
Many of the speeches we have heard this evening have referred to the impact on the economics of farming. Two figures stand out from the Ministry's data on the income of livestock producers. This year's figures show a drop in income on last year of 63 per cent for livestock producers in the less favoured areas and, more seriously, of 76 per cent. in the lowlands.
Mr. Robert Foster, a much respected commentator on livestock, has told me that he fears for lowland livestock producers, not so much from the economic point of view as because of the disruption for the rest of farming if they go out of beef production. Many of them may adjust their farming practices, which will affect others. Mr. Foster was also concerned that animals may be produced in the wrong places, with food moving to the animals rather than the other way round. I hope that the Minister will consider that sage advice from so worthy a commentator.
The Government's comprehensive spending review covered the calf processing scheme. Will the Minister clarify the Government's position? In their consultation document, they said:
The Government's initial view is that the CPAS should be closed in the UK on 30 November 1998. It is recognised that this will have implications for calf producers' returns.
Later, the document says:
No final decision has yet been taken and views are invited, by 2 July 1998.
The livestock producers to whom I have talked accept that the scheme has to change. Many would like a phased reduction in the current aid so that the price of pure beef-bred calves was lowered, finishers' input prices were lowered and we could start getting the economics of the industry back into some order. They also see dairy bull crosses, with the lower price of calves, as a way of encouraging home-produced processing beef, turning back some of the tide of imports resulting from the strength of the pound. The expenditure review talks about


the calf processing scheme ending. The terminology is ambivalent, and it would be useful to know whether the Minister is still of a flexible mind or whether the Treasury has made his mind up and the scheme will close with no further debate.
Livestock producers recognise the need for change, but they want it on the basis of a resumption of good, orderly marketing. They also want the lifting of the ban on beef on the bone. The Minister may be able to enlighten us on an important point. Although I accept that beef on the bone cannot be exported from Northern Ireland, I have not understood why, in such a closed community which has effectively been declared BSE-free, it is not possible to eat beef on the bone from the Northern Ireland stock.

Mr. Mark Todd: Will the right hon. Gentleman give way?

Mr. Jack: I want to make progress; I want to leave the Minister of State adequate time to reply to the debate.
The self-same livestock producers say that they will find it difficult to justify the continuation of the over-30-months scheme in its current form after 1 February next year. They would very much like a rolling scheme, raising the upper limit to 31 months, 32 months and 33 months as we pass the scheme's anniversary. Many livestock producers would welcome the Minister's comments on that.
I should like to turn the Minister of State's mind to the subject of the British cattle movement service. Although I acknowledge that the Government have finally decided to adopt the previous Government's policy of paying some of the costs—at least in the first year—I am anxious to secure from the Minister of State a clear assurance that, over the remaining 14 years of the Workington-based scheme, the Government will not make a profit from it. Farmers recognise that the operation of the cattle passport scheme may incur expense but, as we have heard, their income is extremely perilous and they would not like to think that the Government were making a profit from them.
Much has been said about the need for good marketing. Once the beef ban is lifted, marketing will play a vital role in ensuring that British beef rightly finds its way back into Europe's marketplaces. My hon. Friend the Member for Mid-Worcestershire reflected on the fact that, in Northern Ireland, some £2 million has been found to assist the marketing of beef. I calculated, pro rata, that that is the equivalent of £11 million for the remainder of the UK. Does the Minister agree with that calculation? In spite of the fact that MAFF's budget seems to have been well and truly pinched by the expenditure review, will he be able in the new performance-based world in which we live to find some money to aid the re-establishment of the beef market?
I hope that the Minister of State will forgive me if I job back for a moment to the cattle movement service. Earlier today, I faxed to his office some farmers' concerns about the way in which the registration scheme in particular will operate. Although I appreciate that he will not be able to go into detail on the matter in this debate, it would be helpful if he made the position clear.
The industry would also like to know what the Minister of State can do to help boost the market for the waste products of Britain's beef industry. The beef industry is suffering from a deficit of about £58 million due to the lack of a market for tallow, meat and bonemeal
.
Farmers also raised questions about a level playing field. They share a deep sense that, in some way, other people are getting off lightly. They are aware, for example, of the threats of the so-called Mercosur agreement, which is being reviewed at Community level. They want MAFF to conduct a study into whether our controls, compared with laxer regimes in countries that are sending beef to the UK, are putting us at a competitive disadvantage.
This has been an extremely worthwhile debate. We have reviewed very thoroughly the two Select Committees' findings. I look forward to hearing the Minister of State's reply.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Jeff Rooker): I am extremely grateful to the right hon. Member for Fylde (Mr. Jack) for concluding his remarks in good time. The debate has been very useful. I have lost count of the number of debates on the beef industry—this is probably the fifth or sixth—to which I have responded since May last year.
One or two personal remarks have been made about my right hon. Friend the Minister of Agriculture. I should point out that he was on a farm yesterday and, while I was in the House this afternoon, he met farmers at the headquarters of the Ministry.
I have some prepared remarks, and I can honestly say that they cover virtually all the points that have been raised in the debate. I shall try my best to get through them.
Essentially, the over-30-months scheme is a public health measure inexorably linked to the Florence agreement. It is not a free-standing scheme over which the Government have control. Although the logic of comments about the scheme is there for all to see, I remind hon. Members that it is part and parcel of the Florence agreement. To that extent, our flexibility on it is extremely limited.
Fourteen Back Benchers have spoken in the debate, which has been extremely useful and wide-ranging. I shall deal later with the calf processing scheme. If I have not done so by seven minutes past 8 o'clock, I shall need to be reminded to do so.
The ban on beef exports has of course been lifted in Northern Ireland—so, there has been progress. I accept the fact that the ban has been lifted only in Northern Ireland, where exports have been permitted since 1 June. The area has not been BSE-free, as has been said, although only 1 per cent. of cases of BSE have been found there. It was quite specifically stated that the £2 million that we awarded for the promotion of beef in Northern Ireland was a one-off contribution. It was also seen as part of the peace process. We must take on board the fact that beef exports in Northern Ireland formed a much larger part of its economy than they did in Great Britain's economy.
We are making sustained daily efforts through the date-based export scheme to get the beef export ban lifted throughout the United Kingdom. It is important to note—I hope that hon. Members will take this on board—that the date-based export scheme is now a European Commission proposal and no longer a British Government proposal. It was accepted unanimously by the Commission, so now has all the force of a Commission-driven proposal. I freely admit that there have been one or two examples of people in Europe attempting to rewrite the Florence agreement and rules, erecting hurdles to the lifting of the ban. It is no good me naming names; we need the votes of such people to get the ban lifted. Slagging off people whose support we need—there I am, ever the diplomat—serves no purpose.
On support for the beef industry, we have persuaded the burger restaurant chains to source a proportion of their beef in the United Kingdom, ending a 15-month ban. I understand that latest figures show that McDonald's is sourcing 70 per cent. of its beef in the UK. That is a major contribution. I hope that other users of beef, including schools and local education authorities, will take note of McDonald's confidence in British beef.
I do not want to go over past events, but the House must be reminded that, since March 1996, as we know from the National Audit Office report, £2.5 billion has been spent on BSE-related measures. I freely accept that many are health measures, but I must point out that, at the same time, they support beef, rendering and slaughterhouse markets. It was important that such contributions were made. The selective cull and the massive research and development programme on which MAFF has embarked in respect of BSE must also be considered. In addition—I do not think that any hon. Member has mentioned this—beef producers receive £500 million each year in normal beef subsidies.
I know that some hon. Members are upset that the Government have not paid more agrimonetary compensation; one or two have expressed their thanks, and for that we are grateful. Most of the £85 million compensation—£72.5 million—went to suckler cow producers. It was the first time that any Government had paid such compensation.
We are constantly reviewing the situation as various dates pass. We have listened to farmers' representations on financing cattle traceability, and have decided to pay the setting-up and first-year running costs. That is worth £35 million extra to the livestock industry. It is not as though we said that the scheme would not be implemented and therefore farmers would not have to pay for it. We said that it must be implemented, that it is important to build confidence in the industry and that we shall ask the taxpayer to pay for it. My intervention on the hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy) was therefore quite telling.
Now I shall answer some of the questions that the right hon. Member for Fylde asked us about the British cattle movement service. I was sorting out some of the figures

recently, and it is worth pointing out that, in putting together the names and addresses and matching everything up, MAFF and the Scottish Office have spent 11,000 staff days—85,000 hours, the equivalent of 50 staff years. Without doubt, that has been a major effort.
The BCMS will be allowed to recover the costs only when in due course the charges are made. There will be no attempt to make a profit, or to go back and collect expenditure that the Government have freely contributed.

Mr. Paice: It is in Hansardnow.

Mr. Rooker: Yes, it is. I freely give that commitment; there has never been any problem about that. We are embarking on an operation that will make a major contribution to confidence in the beef industry. As I have already said, Workington will issue 3 million cattle passports—twice as many as the total number of child benefit books and new pensioner books issued each year.
We estimate that we shall record 20 million cattle movements. Comparing that number with, for example, the figure of 15 million or 16 million Visa card holders in this country, shows how very substantial an information technology enterprise we shall be running. Farmers who have cattle that move on a daily basis—perhaps from the farm to common land, or on to other holdings that they may own—can get on to the helpline. It is not our intention that they should have to record those movements on a daily basis.
The Workington helpline is now on call, having been tested successfully on its first day of operation because of the mismatch of some of the addresses. I was pleased when I found out that the president of the National Farmers Union had been given the right name and address, but there was an IT mess-up, for which we apologise. However, it proved the effectiveness of the call service, which took more than 1,000 calls on the first day, and handled them successfully.
As I believe a parliamentary answer today explains, I have arranged to put a box in the Library for all the BCMS material and literature, so that hon. Members can see what is being sent out to farmers. Over the next two weeks, the big mailshot will be undertaken—the issue of all the barcodes to the farmers. It so happens that the mailshot that went slightly wrong was designed to tell people about the helpline—so it worked.
We have agreed not to collect the specified risk material control charges, and that is worth £35 million a year. That cannot simply be dismissed as though it were not a contribution. We are also supporting the assured British meat initiative, and have awarded nearly £2 million towards the development of those new standards in the industry.
I accept, of course, what the National Audit Office says about the scale of the expenditure—that it will rise to £4 billion, even with a decline in BSE cases. The weekly figures for BSE cases are in line with the forecast that predicts eradication by 2000 or 2001; we are still on course for that. However, we shall not sacrifice any public health issue for any short-term gain; I must make that point abundantly clear.
The Government have been active in ensuring that reasonable quantities of beef are accepted into intervention, in an effort to underpin the market. Hon. Members will be aware that, early this year, we arranged for a special sale of 1,200 tonnes of United Kingdom intervention beef to our armed forces. From about mid-September, we expect the Ministry of Defence's requirements for hindquarter beef to be satisfied entirely from intervention stocks. That has helped to achieve a better market balance, and in fact there has been no intervention in Great Britain this year, and none in Northern Ireland since May.
Some hon. Members mentioned, almost in passing, that beef imports are down by 22 per cent. for the first four months of this year. Consumption is broadly the same, if not slightly higher than last year. As one of my hon. Friends said, that shows that, since last December, the British people's confidence in British beef has increased substantially, as is demonstrated by their buying it in the marketplace.
What happened last December? The British people understood that, without any equivocation, they had a Government who were not prepared to take the slightest risk with the safety of British beef.

Mr. Paice: Rubbish.

Mr. Rooker: That is the reality. Since that decision, British people have been buying British beef on a scale unparalleled in the past two or three years.
We have launched the beef labelling scheme, and hon. Members will know from my recent labours at Question Time of my efforts to raise red meat standards in the abattoirs. I have to say that I have refused another licence today, although for obvious reasons I cannot disclose any details now.
The Meat Hygiene Service is raising standards too, and we have increased veterinary supervision in the abattoirs with poor standards of hygiene. We are publishing more information about the red meat industry than ever before, to make it more open and to prove to everyone, such as future customers in Europe and elsewhere in the world, that we have nothing to be ashamed of or to hide in this country's beef industry.
There are therefore a host of issues on which we can say that we are making a major contribution. I hope that I have covered the points in the fax that the right hon. Member for Fylde sent this morning. He mentioned deadlines for cattle passports and the penalties for late application. Those are nothing to do with the British Government. As I have made abundantly clear, those are European deadlines, and we cannot change them.
We are consulting on various aspects of cattle passports now, and we shall report to the House in due course. I have covered the points about notifying movements, and about the costs. As for resolving difficulties, if there are difficulties for any cattle farmer, the BCMS dedicated helpline is available at local call rates, and will be open from 31 August for seven days a week from 7 am to 7 pm; at present it is open for slightly shorter hours.
We are on course for starting the process from 28 September, and we are watching what goes on, on an hourly basis. If there is an hour's slippage, my right hon. Friend and I are aware of it in MAFF. Together with our staff in Workington, we are building a world-class organisation.
There are two more points to which I want to respond. The hon. Member for Ross, Skye and Inverness, West talked about the collapse of the court cases. That description is not strictly true, although the hon. Gentleman will understand that, for obvious reasons, I cannot comment on the Scottish case.
There were three other cases, one of which involved a butcher at Bletchley, who pleaded guilty and was let off with a caution for the next three years when he promised not to sell beef on the bone again. That is fine. The second butcher has elected to plead not guilty and have his case heard in a Crown court. The other case, involving Rother district council, has been adjourned initially until Monday 20 July. The law is taking its course. MAFF is not the prosecuting authority, and those cases are matters that we must leave to the prosecuting authorities.
I promised that I would deal with all the points; I hope that I have dealt with what has been said about the over-30-months scheme. Clearly, as hon. Members will appreciate, I cannot embark on a debate about the comprehensive spending review, but more than one hon. Member has asked about the calf processing aid scheme—the Herod scheme—under which more than 1 million calves have been slaughtered. It does not represent a good animal welfare situation, and it is distressing for everyone concerned—farmers, slaughterers and renderers. One does not deny that the position is very difficult.
Paragraph 18.7 of today's White Paper, about eradicating BSE, says:
BSE cases in cattle are now falling rapidly, and the costs of the crisis to the taxpayer will reduce as compensation under the Calf Processing Aid Scheme is ended, and charging for the full cost of controls in abattoirs is introduced. Protection of the public will continue to be the top priority".
We are consulting about the ending of the calf processing aid scheme now, and I expect it to be closed down during the current financial year, but I cannot give a precise date at this stage. The obligation to run the scheme will lapse on 30 November.
I had a conversation with my right hon. Friend the Minister of Agriculture, Fisheries and Food this afternoon after attending the House, and we discovered—perhaps "discovered" is too strong a word, so I shall say instead that we were given to understand—that the decision to close the scheme on 30 November this year was taken before the general election. That being so, the papers are of course not available to my right hon. Friend and myself.
The scheme is compulsory until the end of November, but the European Union is not willing to open the decision made in 1996, before the present Government came to office. I know that that does not lie well with the fact that the consultation is to close on 30 November. However, I repeat that we do not expect the scheme to go beyond the current financial year; indeed, I expect it to close within the current financial year. I cannot give a specific date, although we are consulting on that.
I take on board the logic of what hon. Members have said about closing the scheme before the date-based export scheme is in being, and about the effect on the market. After all, it is a market support mechanism as well as part of the public health process.
I have been open with the House. No one will ever be able to accuse me of misleading the House from the Dispatch Box. I have been as open with the House as I


possibly can be on what looks like a contradiction. However, there is not a contradiction in the sense that the process is compulsory until the end of November and the EU will not revisit that decision, which was taken in 1996. However, we are still consulting—

It being three hours after the commencement of proceedings, the debate was interrupted, pursuant to the resolution [1 July].

Question deferred, pursuant to paragraph (4) of Standing Order No. 54 (Consideration of Estimates).

University Research

Class V, Vote 2

[Relevant documents: First Report from the Science and Technology Committee of Session 1997–98, on the Implications of the Dearing Report for the Structure and Funding of University Research, HC 303-I, and the Government's Response thereto, HC 799; The Department of Trade and Industry's Departmental Report: The Government's Expenditure Plans 1998–99, Cm 3905.]

Motion made, and Question proposed,
That a further sum not exceeding £719,838,000 be granted to Her Majesty out of the Consolidated Fund to complete or defray the charges which will come in course of payment during the year ending on 31st March 1999 for expenditure by the Department of Trade and Industry on payments to the Science Research Councils, the Royal Society, the Royal Academy of Engineering; OST initiatives; fees payable under the Animals (Scientific Procedures) Act 1986; and Research Council Pensions.—[Mr. Battle.]

Dr. Michael Clark: The Select Committee on Science and Technology is pleased that the Liaison Committee agreed to recommend this debate on the structure and funding of university research. The members of the Select Committee think that it is a very important subject—so much so, that it was the subject of our first report in this new Parliament.
We noted that the Chancellor of the Exchequer, in his statement this afternoon, said that science is an important matter for the country, for the economy of the country and for the well-being of the people. We are delighted that, in this Parliament, more scientists are serving as Members of Parliament than there ever were in the previous Parliament.
The Select Committee, which I have the honour to Chair, consists of six science PhDs, two hon. Members with science qualifications or experience, two engineers and one computer scientist. I do not think that we have ever before had a Select Committee so well qualified to look at the issues of science and technology. Most of the members of the Select Committee are in the Chamber tonight. We have agreed—I hope that I can abide by the agreement—that we will voluntarily limit our speeches so that as many of us as possible can say a few words.
The Select Committee's inquiry started in July last year. We took oral evidence on six occasions from 17 different organisations and individuals representing the Government, the Higher Education Funding Councils, research councils, universities and industry. In addition, we had 53 memoranda. The report was unanimously agreed on 25 March.
We were looking into the recommendations of the national committee of inquiry into higher education, which I will call the Dearing committee as a form of shorthand. That committee was appointed in May 1996 by the previous Government, and it was chaired by Sir Ronald—now Lord—Dearing. On behalf of all members of the Select Committee, I congratulate Lord Dearing on his report and also on his ennoblement—which is a recognition of his considerable contribution to public life in general and to education in particular.
Many of the recommendations in the Dearing report that relate to research have expenditure implications; therefore, the Government felt unable to make a full


response until the comprehensive spending review had been completed. Of course, we heard the statement on that this afternoon.
The Select Committee's report deals only with the Dearing recommendations that would impact on the way in which research in universities is directed. We recommended the retention of the dual support system, which delivers Government funds for research from both the Office of Science and Technology and the Department for Education and Employment. However, the Committee rejected a number of Dearing's specific recommendations relating to the way in which funds are disbursed.
Our report calls for a substantial and sustained increase in Government funding for university research and research infrastructure. It also considers appropriate balances between the emphasis put on teaching and research by university departments, but the Committee did not look at teaching per se, because that was not in our remit.
The Select Committee broadly concurred with the Dearing analysis of the problems in university research, but did not support the majority of his recommendations. However, when Dearing concluded that
the funds available to support research are barely adequate",
the Select Committee went further and concluded:
it is our view that they are wholly inadequate and that without substantial and sustained additional public investment the Government will be putting the nation's future prosperity and quality of life at risk.
Our report went on:
We know that, in sum, our recommendations entail a substantial increase in public expenditure; we make them without any embarrassment. There is an overwhelming case for a substantial real terms increase in Government expenditure in research as an investment in the nation's future.
In due course, the Government responded to our report. I was delighted to receive a letter, dated 15 June, from the President of the Board of Trade. She said in her personal note to me:
I am most grateful for the detailed and thorough way that the Committee has examined the issues. Your report has been of value during the Comprehensive Spending Review".
I hope it has. Yesterday's press release from the Department of Trade and Industry, together with the Chancellor's announcement today, show that the Government have certainly listened, primarily to Dearing and his report, but also to the Select Committee's recommendations. I thank the right hon. Lady for her courtesy in sending me that note.
There is an overwhelming case for a substantial real-terms increase in Government expenditure on research, beyond that which is required to make good the current shortfall. Yesterday and today, the Government have responded and shown that they realise that there is a need for a substantial real-terms increase in funding. Their announcements on the principle, and more particularly on cash, are most welcome.
The dual support system for funding university research should be retained. Indeed, in their response the Government noted that there was widespread support for the retention of the dual support system. Today's announcement seems to endorse that, but we have no indication yet of any cash from the Higher Education

Funding Council to pay for research. Therefore, although dual support seems to be approved in principle, so far we have seen funding from only one side of that.

The Minister for Science, Energy and Industry (Mr. John Battle): I hesitate to interrupt, but the statement today included extra resources of £400 million.

Dr. Michael Clark: I am grateful to the Minister. I thought that that £400 million was for the research councils and not for the Higher Education Funding Council to allocate to research. I am sure that I read the statement thoroughly, and I thought the money was for the research councils.

Mr. Battle: The £300 million in the statement published today is in addition to the money announced yesterday, as will be set out by my right hon. Friend the Secretary of State for Education and Employment tomorrow.

Dr. Clark: I am most grateful for that good news. We have £400 million for the research councils and £300 million—the other side of the dual support—for the Higher Education Funding Council to spend on research. That intervention clarifies the matter.

Mr. Phil Willis: Does the hon. Gentleman agree that there is still confusion because £300 million was included as part and parcel of the money from the Wellcome Foundation for infrastructure? Will that £300 million go towards those costs?

Dr. Clark: That is possible, but I hope not.

Mr. Battle: I wish to say simply that there is an additional £300 million. I will do my best to lay out the figures, £100 by £100, when I wind up.

Dr. Clark: Let us move on to funding for infrastructure, which is primarily a matter for the Higher Education Funding Council. The money comes from the Department for Education and Employment, and the corresponding Departments in Scotland, Wales and Northern Ireland.
The Minister has suggested that £300 million will be available. For infrastructure, £300 million is being made available following the generosity of the Wellcome Foundation. Is that £300 million from the Wellcome Foundation free money which can be used as freely as the £300 million that the Government are providing, or is it to be directed to projects in which the Wellcome Foundation takes an interest or pet projects it wishes to pursue?

Mr. Battle: indicated assent.

Dr. Clark: The Minister appears to suggest that it is free money which can be spent as freely as the Government money. That is reassuring.
On the indirect costs which the research councils should bear, the report said that the research councils
should pay the full indirect costs, excluding academic salaries, of the research which they fund in universities.


The report continued:
all increased expenditure incurred by the Research Councils as a result of paying a higher rate for indirect costs be matched by increased Government funding".
We do not at this stage have any indication of whether the Government accept that statement with regard to indirect costs, and, if they do, where the money will come from for indirect costs.
The £407 million that the Government are allocating is, they say, for new research. If it has to be used to pay for the indirect costs also, there will not be as much money for new research as the Government had thought or as we would wish.

Mr. Tam Dalyell: On the subject of the Wellcome Foundation, the hon. Gentleman used the words "pet projects". Before she retired, I thought that Dame Bridget Ogilvie made it clear in public lectures that the foundation worked closely with the Department, and she certainly would rebuke anyone who accused it of having "pet projects".

Dr. Clark: I heard Bridget Ogilvie say the same thing when the hon. Gentleman and I were together at the Law Society, when she talked about how the money was to be allocated. However, I thought it was right and prudent to check with the Minister that the money from the Wellcome Foundation was not being directed, but was free money to be used as freely as the Government money. The Minister said that that was the case
.
If I go on much longer, Mr. Deputy Speaker, I will be breaching the covenant I reached with the Select Committee members to keep my speech short so that they may contribute. I conclude with another question for the Minister—I had three. The first, about the funding for the Higher Education Funding Council, has been answered. The second question was about whether the Wellcome Foundation money had any strings attached, and that has been answered. My third question concerns the indirect costs, and I do not think that that has been answered. I hope that the Minister will refer to that matter when he winds up.
Science is a very important subject, and those who are trained in or studying science think that it should be tackled in an objective, and not subjective, way. The Committee has tried hard to tackle every inquiry we have undertaken on a cross-party basis, as scientists and not so much as politicians—although we are politicians, too. Science is a subject on which we seek truth, objectivity and progress. The Select Committee has done that in this inquiry.
The Minister takes a strong interest in science, and we are pleased he does. Yesterday's statement from the DTI, and today's announcement of the comprehensive spending review, show that the Government also take science seriously. May I say, from this side of the House, that we are delighted that that is the attitude of the Government? We will always think that there is more that the Government can do, and perhaps the Government think so as well. However, it has been a good two days, and I thank the Minister for what he has done to progress funding for science over the last year.

Mr. Alan W. Williams: ): I thank you, Mr. Deputy Speaker, for calling me so early in the debate. It is a pleasure to follow the distinguished Chairman of our Committee, the hon. Member for Rayleigh (Dr. Clark). I was on an earlier Select Committee from 1992 to 1997. Half its members were from a science background but, as the hon. Gentleman said, every member of our Select Committee in this Parliament has a good science background. Therefore, our deliberations are well informed.
Our first inquiry was on the Dearing report and its implications for the funding of university research. We were operating on a rapid time scale so that our report would be available to the DTI for its lobbying in the comprehensive spending review. I am delighted that the Government have taken such a positive view of the report.
I have been involved in Select Committees for ten years or so, and therefore have been involved in the preparation of about 20 reports. Generally, when we have the Government's response, there is always something positive—provided it does not cost too much. The only real achievement of those 20 earlier reports was when the Advisory Committee on Genetic Manipulation was set up as a result of one of our reports. On this occasion, I am delighted that the Government have adopted almost every recommendation we made.
The strongest recommendation was on infrastructure in universities—both equipment and buildings—and concerned the general capital rundown that has taken place because of the shortage of money in the last few years. The figure we quoted in the report, as a kind of consensus estimate of how much was needed to make good the infrastructure problem, was between £410 million and £430 million, spread over the next three financial years. Yesterday's announcement exceeded even our highest expectations. Thanks to the Wellcome Foundation, a 50:50 partnership with the Government has produced £600 million over those three financial years. It is wonderful that the Government and Wellcome should have set out to solve the infrastructure problem over three years.
Other elements in yesterday's announcement total £1,100 million—£400 million from Wellcome and £700 million from the Department of Trade and Industry—to be added to the science budget of the DTI in those three years. It took me some time last night to work out how those figures match. Had there been no increase yesterday, the total would have been £4.05 billion for the science vote, but, with the additional £1.1 billion, it is effectively a 27 per cent. increase in science funding over the three-year period-10 per cent. from Wellcome and 17 per cent. from the DTI. That is a superlative increase.
Save British Science, which has been rightly critical of the Government over the years—that is its job—issued a press release yesterday, the tone of which was almost unqualified delight, referring to
a good day for British science".
This weekend's briefing from the Committee of Vice-Chancellors and Principals mentioned that in the United Kingdom expenditure on science research and development
compares unfavourably with other G7 countries, having fallen in real terms by 21 per cent. between 1986–7 and 1997–8.


I hope that industry will match the Government's record during the next three years, and realise just how important is science research and development. Today's announcements and yesterday's from the DTI are a good start in making good the shortfall that there has been.
I hope that, when we meet again for our comprehensive spending review, the finances allocated for infrastructure will be consolidated within the science budget for years four, five and six of the Labour Government, and that we can maintain an annual increase of the order of 8, 9 or 10 per cent. for five, seven, 10 or even 20 years. My arithmetic tells me that a 10 per cent. growth over seven years is a doubling of the science budget, over 14 years a quadrupling, and that over 20 years there would be an eightfold rise in the science budget. I do not know whether we shall live to see that.
Over the years, science has been underfunded by Government and industry. I am delighted that the Government have taken such positive steps, and I am pleased with the Select Committee's role in producing an authoritative and detailed piece of research which has helped to persuade the Government.
The hon. Member for Rayleigh referred to several other smaller points in the report. There was some sign that the Treasury was of a mind to change the funding structure. All the representations that we received were strongly in support of dual funding, the one mission-oriented and the other for original seedcorn research. The Select Committee awaits the Government's response to its report on the millennium bug, and we are working on an inquiry into innovation in engineering and on the advisory system.
I hope that we shall be able to develop the good working relationship demonstrated by the positive response to our first report. The Select Committee could be a kind of think tank, to help produce and to spur on Government policy. As the hon. Gentleman said, we work very well in a non-party sense, with science and the future of Britain at the heart of our deliberations, and we look to Britain's long-term prosperity.
Thank you, Mr. Deputy Speaker, for allowing me to make those few comments in the debate.

Mr. Phil Willis: First, I apologise for the fact that my hon. Friend the Member for Cheltenham (Mr. Jones), who is a member of the Select Committee, is not in the House tonight. As the Liberal Democrat spokesman on higher education, I speak on behalf of my party.
First, I congratulate the hon. Member for Rayleigh (Dr. Clark) and his Committee on an extremely good report. I also congratulate the Government on their positive response. That set the tone for the comprehensive spending review. The announcements of the past two days reflect the quality of the work that went in, not simply from the Dearing committee but from the hon. Gentleman and his Committee. It is worth putting that on the record.
There is no doubt that knowledge-based industries will provide the key to competitiveness in the next century. Those industries depend on a world-class science base which not only provides the information and ideas which fuel new developments but, just as critically, the technicians and scientists who man their laboratories. Britain publishes about 5 per cent. of the world's

scientific academic papers—a rough measure of scientific output—yet to be able to understand and use the other 95 per cent., industry has to have in-house scientists who are trained in state-of-the-art ideas and techniques.
The benefits from investment in science are well illustrated by the pharmaceutical industry—Britain's major industrial success story of the last 25 years. Here, close relationships between academic science and industry, with substantial investment in basic research by the public sector, matched by high levels of investment in research and development by the industry itself, have helped to make British firms such as Glaxo Wellcome, Zeneca and SmithKline Beecham leaders in the global marketplace.
Those firms have created a magnet attracting top-class international firms, and top-class international institutions, such as the European Medicines Evaluation Agency, to the United Kingdom. The research laboratories of those firms, located in Britain, bring well-paid jobs and prosperity to their local communities. They are just the sort of jobs that we want to create in Britain in the next century, but we will attract them only if we have the infrastructure and the trained labour force that they need. If the Government do not make the necessary investment—they have made a start over the past two days—we shall lose them. That is why the Government's response is as welcome as it is important.
Like so much else, scientific research is yet another example of the way in which, in some ways, we have squandered our heritage during the past two decades. Both in absolute and in percentage terms, the British Government are spending less than any other advanced industrialised country on supporting research in the higher education sector—a mere £61 per head of population, compared with countries such as Switzerland, Sweden and the Netherlands, where spending is upwards of £150 per head.
Among Organisation for Economic Co-operation and Development partners in Europe, only Spain and Ireland spend less than we do, and both are fast catching up. However, that is before the Government's announcement, which clearly means that the calculations must be revised. Britain is also distinguished by the slowest rate of growth of such expenditures—a mere 1 per cent. per annum since 1984—of any OECD country. That is a record of near-criminal proportions, because it has left the future prosperity of the British economy exposed and vulnerable.
Even at those low levels of expenditure, Britain punches above its weight, and our research institutions and universities are a tremendous success story. A recent paper written by the Government's scientific adviser, Sir Robert May, shows that, in relation to population, we are still publishing more top-class academic papers, at lower cost, than any other country.
The Treasury must be well pleased. It has squeezed the pips out of the university sector, and, to be fair, it has worked. Productivity has increased, and costs have gone down. But, as Sir Robert himself warns in his paper, the only reason costs are so low is because academic salaries in the UK are grossly uncompetitive.
In the past, the cream of our graduates chose a research career, but if, as is the case now, at the age of 26, with three years of a bachelor's degree and four years of a doctorate behind them, we are able to offer those high fliers only short-term contracts on salaries of £16,000


to £17,000, it is no wonder that they are opting with their feet and choosing jobs in the City which offer them twice those salaries, and the prospect of Christmas bonuses running into hundreds of thousands of pounds.
It is not just our research fellows who are being undervalued. Like every other sector, the university sector has been living off past capital and failing to renew it. The Dearing report highlighted the cost of making good the backlog of equipment renewal to bring universities up to modern laboratory standards, which are not only necessary to undertake state-of-the-art research but are demanded by the Health and Safety Executive. That cost is now estimated to be more than £1 billion.
The cost of bringing UK Government expenditure on research in higher education up to average levels of OECD countries is a further £1 billion. Britain cannot afford to ignore such investment. The Dearing report and the report by the Science and Technology Select Committee made that clear, and the Government have responded positively.
The story of the pharmaceutical industry should not be neglected. The investment in molecular biology research was funded over many years, with no obvious return except intellectual excitement and Nobel prizes. Today, it supports a multi-billion-pound industry, in which Britain has become a leading player. There are many other potential success stories if we are prepared to make the investment, which is why the Select Committee report was so welcome. It unambiguously says:
there is an overwhelming case for a substantial real terms increase
in Government funding for the science base
as an investment in the nation's future".
Yet the Government's response prior to yesterday's announcement was relatively meek. They seek full credit for the half-hearted measure that they introduced last year—the joint research equipment initiative—which, as the Committee pointed out, was mainly a reorganisation of existing research council budgets, and brought only a minimal amount of new money onto the scene.
The £600 million injection of resources jointly by the Government and the Wellcome Foundation has gone a long way to redressing the balance, but it still falls short of the £1 billion needed to re-equip aging laboratories and replace obsolete equipment. It is also a one-off injection of resources.
When the Minister winds up, he must make a commitment to increasing investment in the research infrastructure on an annual basis. Both the Dearing committee and the Select Committee have identified the need for full reimbursement of the indirect costs of libraries, computing, and research support services, but, unless the indirect costs attached to research projects are funded in full, universities will continue to struggle.

Mr. Battle: I apologise for intervening on the hon. Gentleman, but I wonder about his arithmetic. We have invested £700 million, and the Wellcome Trust has invested a further £400 million, on infrastructure alone. That makes a total of £1.1 billion, which is more money invested in science than the sum which some parties have suggested should be invested in education through a tax increase. To say that it is a one-off injection of resources

is not quite fair. It is a three-year programme, so that people can break out of the bracket of annualisation and know where they are going.

Mr. Willis: I am grateful to the Minister for his intervention. I do not wish to belittle what the Government have done. Indeed, I have tried to make it clear how much we support what they are trying to do. However, we need not just an injection of resources into our infrastructure now, but a continued incremental injection of resources not only to keep pace with the backlog of repairs and renewals but to provide the best basis for research in the future.
The comprehensive spending review has identified some £407 million for research for the research councils. The Select Committee called for some £400 million of new money to be allocated to that area over the next three years, which appears to be what the Chancellor has delivered. That reflects the fact that the Government have listened to the Select Committee.
We are led to believe that the additional resources for the research councils have not resulted in a dramatic decrease in funding for university research. Indeed, the Minister has made it clear that the other part of the dual funding arrangement will be boosted by a further £300 million. There is general agreement that the dual funding support system should continue.
It would be churlish for Liberal Democrats to say other than that we welcome the Select Committee report and the Government's efforts to address the report and to give our universities and research councils the best basis on which to begin not only the next year but the next millennium.

Dr. Phyllis Starkey: I am not a member of the Select Committee, but I wish to expand on one or two points made in its report. I shall keep my remarks brief, in deference to my hon. Friends who want to contribute to the debate.
My first point is about the performance of UK science in the international context. In many areas of science, the UK is "punching above its weight", as the phrase goes. It must be said that our performance is patchy and that there are some areas of science in which we are not punching above our weight. Moreover, our performance is measured in terms of publication output, which is falling in relation to the performance of other European countries. That reflects consistent under-investment in universities, on which the Select Committee report comments.
The Association of the British Pharmaceutical Industry has expressed considerable concern that graduates are not as useful to it as they might be, because, as a result of lack of investment in university infrastructure, they have not had sufficient experience with cutting-edge equipment. There is a real threat that, because of that under-investment, the pharmaceutical companies based in this country might start to think about moving their research and development elsewhere.
Today's announcement by the Chancellor was welcome, and I look forward to hearing my hon. Friend the Minister explain what it means in this context. Important though adequate funding is, other questions


need to be answered. However generous funding is, the UK cannot do everything, and must be selective if it is to maximise the effectiveness of its investment.
I have a number of points to make about the dual funding system; they relate not to money—although that is important—but to the way in which the two systems have operated in the past. Essentially, between them the two systems drive university research: the funding councils through block grant, and the research assessment exercise and research councils through the funding of project and programme grants and fellowships. In the past, each system was left to run independently. The result was not what either system desired.
There are clearly faults in the operation of the funding council system. The research assessment exercise decides on a block grant, which provides funding for infrastructure within universities. It is accepted that that funding has been insufficient. Moreover, the money is not necessarily spent by the university departments that win the funding. That has the advantage that it gives the universities some freedom to provide for seedcorn funding for new researchers, but it means that the funding council rewards excellence by giving money to universities to use as they wish.
All sorts of concerns have been expressed about the research assessment exercise, its lack of openness and the low reward for collaborative research for multidisciplinary research and for applied research. I hope that those concerns will be addressed.
The research councils award funding competitively, although they have clear scientific strategies and set out certain priorities for which they invite funding. The result of those two systems operating independently has not been entirely benign. The two systems have certainly been responsible for a huge expansion in the number of short-term researchers in universities. They have encouraged people applying to the research councils for research funding to make an unrealistic and inadequate assessment of their indirect costs in the belief that, if their grant application is not too big, it is more likely to be funded.
The enormous number of people applying for money that does not meet demand means that success rates, certainly for funding in the biological sciences, are about 25 to 30 per cent. That means that enormous effort is put into preparing applications and administering the assessment methods for applications, and an enormous amount of time is spent in the peer review system, using academics who might otherwise be doing research. Hardly any time in the research councils is spent on evaluating research or the other work that they should be doing.
Between them, those two systems are inexorably leading to a concentration of research in a relatively small number of universities. The 10 universities with the highest overall income receive 40 per cent. of the funding council money, 50 per cent. of the research council grants and 60 per cent. of charitable grants. The way in which the research assessment exercise operates means that the funding council grants will follow the research council and charity grants and will further concentrate research. Unless explicit decisions are taken, we shall drift into a situation in which there are 10 or fewer super-universities, and the rest of our universities will carry out limited or specialised research, or will not carry out research at all.

Universities are extremely important to regional economic development. A Wellcome Trust study of publications involving industrial collaboration with academics clearly showed that industry tends to collaborate with universities that are geographically close to them. Science parks are another acknowledgement of the need for industry to feed off universities that are geographically close to it. In England, the funding council must have a regional strategy to ensure that centres of excellence are geographically spread, and are not the random result of the way in which the research assessment exercise happens to work out.
We need the funding councils to have policies that encourage co-operation, networks of collaboration and virtual centres so that we can maximise the investment in research equipment and ensure that universities operate in such a way that they encourage regional economic development. For people who work in universities in research, we need to get away from the current situation, which maintains an army of contract staff who have little or no security and no career progression.
I hope that we will have within the research councils a sensible strategy that achieves a proper balance between longer-term programme grants and short-term project grants. We cannot rely on peer review panels to do that, because they are part of the research community and they tend to spread the money as thinly as possible. The results of the comprehensive spending review give a huge boost to university research, but we must ensure that the decisions taken on the underlying problems are the right ones, or the country will not reap the benefits that it should.

Mrs. Caroline Spelman: I am grateful to be able to participate in the debate. I shall keep my remarks brief and want only to add to the body of information that is coming from members of the Science and Technology Committee.
I concur that it would be churlish to criticise the Government for increasing spending on science and technology, but I was concerned when the Minister appeared rather casually to lose about £100 million. He said that £400 million might be available through higher education, but that has been adjusted down to £300 million. In the fulness of time, we shall all be clear on those details.
I concur with the hon. Member for Harrogate and Knaresborough (Mr. Willis) that the framework to the discussion has to be Britain's competitive position. He made that point clearly in relation to other Organisation for Economic Co-operation and Development countries, but what really counts is the combined total of public and private funding on research and development. The Science and Technology Committee drew attention to the United Kingdom's comparatively weak position in relation to its competitors when those two sources are considered together. I agree with the hon. Gentleman that one would have to adjust those figures in the light of today's announcement, but the percentages of gross domestic product spent should be compared: Japan spends 2.8 per cent., so it is way out in front, the United States spends 2.1 per cent. and the United Kingdom is well behind, on 1.7 per cent
.
Some of the Science and Technology Committee's concerns have not been adequately addressed, and I look forward to hearing from the Minister about them.


I endorse what the hon. Member for Milton Keynes, South-West (Dr. Starkey) said about the dual support system, which must be adequately resourced. We are also concerned about the indirect costs that universities have to bear, such as those of libraries, computing and support services, which are not adequately catered for.
I want to bring to the debate my personal concerns, especially for universities with a high percentage of science and engineering undergraduates, graduates and research students. Those with a high level of practical and applied subjects bear an especially great burden. Coventry university, for example, has a high percentage of science undergraduates and graduates and serves the surrounding manufacturing industry in the west midlands. Some universities with a strong science base may find themselves in a disproportionately awkward position compared to other universities.
Many of the new universities created since 1992 have risen to the challenge of social exclusion in higher education. They bear the extra costs of access for students who perhaps need additional preparation before entering higher education and going on to do the kind of research for which the funding is intended. If that additional spending is skewed only towards research, however, it will ignore the extra teaching costs which the new universities bear as they try to achieve access. For example, the Chelmsley Wood campus of Solihull college offers a two-plus-two course with Warwick university to ensure that students from underprivileged backgrounds have an equal access opportunity. By definition, it will take such students longer to achieve that.
Has the Minister factored into his thinking on funding the impact of the changes in the student support system? I agree with the hon. Member for Milton Keynes, South-West that there are likely to be changes in the geographical distribution of research centres of excellence. One of those changes may be driven by the fact that students will increasingly enter higher education from home and live with their families to keep down the cost of obtaining their degrees.
Universities in cities may become over-subscribed and those in rural locations—where, by definition, a student has to accept the costs of living on campus—may decline. For example, there is a contrast between a university such as Keele and a university in the centre of Birmingham, and universities are concerned about what can be done about over-capacity and under-capacity resulting from changing geographical distributions.
The effect of that can be seen in the choice of subjects. Aston university is attracting an increasing number of Asian applicants, especially Asian woman applicants, who prefer particular subjects such as optometry, which is a popular choice at Aston. That is resulting in increasing and excessive demand for the subject and in declining demand for traditional core subjects, which are in the engineering base. That factor must be taken into account when funding is ultimately disseminated to those universities.
It was Sir Ron Dearing, as he was then, who recommended in his report that funding should follow the student. That was in recommendation 72—one of the recommendations that the Select Committee considered, and one that I particularly urge the Minister to consider when funds are disseminated in higher education.
There is no doubt that, if we are to achieve and maintain our world-class research base, we must first have a foundation of strong undergraduate training. Let me end with a plea to the Minister that there should be no shortcoming in the preparation of a base on which a research structure can be created.

Dr. Lynne Jones: Often in politics, I despair at the way in which decisions are made not on the basis of the arguments but on the basis of the power of the person advancing those arguments. That is why, for me, one of the delights of being a member of the Science and Technology Committee is that we go about our work in a non-dogmatic, consensual way, looking at the facts objectively and—I think—producing excellent reports such as the one that we are debating.
Sadly, the media pay little attention to our work except from time to time. I believe, however, that in the last Parliament we had an impact in forcing the then Government to set up the Advisory Commission on Human Genetics. I think that, when Dolly the sheep came along, the commission was glad to have taken our advice. I am also delighted by the Government's positive response to our report on the funding of university research.
Some of my colleagues have been at pains to draw attention to the extent of the scientific background of members of the Committee. Lest anyone think that we all have vested interests, let me point out that other Committee members have other life experiences. Certainly it is a long time since I could truly claim to be a scientist, although I am proud to have a scientific background.
A striking feature of the evidence that we have been given, not just in this inquiry but in others, has been the widespread support for publicly funded research. That support has come not just from the usual suspects—the Royal Society, the Committee of Vice-Chancellors and Principals and others with an academic interest—but from industry. Again, I am not referring just to one part of industry—the pharmaceutical industry—but to the Confederation of British Industry and aerospace companies. It is clear that, as Lord Dearing told us, investment in research is the only possible strategy for the advanced world: it is the only way in which we can remain competitive in the 21st century.
That view was endorsed in research by the science policy research unit at Sussex university, which was commissioned by the last Government but, sadly, was not acted on. That research concluded that
publicly funded basic research seems to have a substantial impact on productivity".
In view of the lag in our productivity, we have a good deal to make up. Nevertheless, the research that we conduct suggests that we are among the most competitive in the world.
Recent analysis by the chief scientific officer showed that British scientists top the league in terms of the number of research papers that they publish—and, apart from published research, in terms of the extent to which their research is cited by other researchers, in the context of the amount that is spent. We should not rest on our laurels, however: much of that finding is based on past funding of research, and much that relates to high


productivity is based on the poor conditions under which researchers must operate. I refer not only to equipment and facilities, but to financial rewards.
Professor Jack of the Wellcome Trust told the Committee that, over the past 25 years, the salaries of university employees and researchers had fallen by 50 per cent. compared to the national average wage, and had barely kept up with inflation. In an earlier debate, following the last Government's publication of the White Paper "Realising Our Potential", I pointed out that academic staff are now being paid less than police sergeants. That created something of a scurry in the official Box, but the figure was never denied, and the position has clearly worsened since then.
There is also the problem of the "contract culture". Increasing numbers of researchers are on short-term contracts, which means that their career prospects are very insecure, and that our brightest and most able young people are not attracted to research.
The Science and Technology Committee said:
Ensuring adequate funding for the research base in the long term is the only way to reverse the increase in short-term appointments.
Clearly, that must be right. Not only has the number of short-term appointments increased, but researchers have to operate under poor conditions of service. It is not that universities want to offer poor conditions of service: it is that financial constraints have been placed on them in the past few years.
It is with absolute delight that I praise the Government to the roof on their announcement, although I may make a few critical remarks. The Committee recommended that, in the next three years, an additional amount of just over £400 million should be put into the research infrastructure. It also said that, when funding research contracts, the funding councils should meet the cost of overheads, which should be about £185 million a year.
With the money from the Wellcome Trust, we have just about achieved the figure. We have had £700 million from public funding, £300 from Wellcome and £100 million for the IT systems. Although the Minister said that the money from Wellcome could be used for any area of science, I should point out that Wellcome has a fiduciary duty to
fund medical research which may conduce to the improvement of the physical conditions of mankind.
The trust's objects specify medical research, although that can be widely interpreted.
I should like assurances from the Government that physical science will not miss out in the bonanza. I was originally a biochemist, so I am obviously in favour of spending on biological and life-science research, but I have become increasingly fascinated by other research. For example, particle physics may not have an immediate spin-off for the economic good in the short term, but in the long run it produces highly skilled people who can greatly contribute to the skills of the work force. That is beyond blue skies research, and it should be supported.
I should like to deal with the issue of dual support, and to clarify for colleagues what the White Paper said. It states:
For both Further and Higher Education extra resources will be earmarked for infrastructure, equipment and an expansion of student numbers.

It further states specifically:
This will be in addition to substantial new funding for scientific research, complementing additional provision available through the Research Councils.
We feared that the Government would give with one hand for the science base, and take with another by undermining the funding councils. I am pleased to say that that is not the case.
Back in the Thatcher years, an organisation was founded called Save British Science. The name conjures up a lefty pressure group whose aim is to undermine the elected Government and the order of things, but nothing could be further from the truth. Save British Science has such eminent supporters as Sir Richard Doll, the Nobel prize winner Harry Kroto, Dame Bridget Ogilvie of the Wellcome Trust, Sir Martin Rees, the Astronomer Royal, and Sir Richard Sykes of Glaxo. Perhaps it is now inappropriate to have a society called Save British Science. Today's announcement has saved British science: the society could keep the acronym and change its name to Support British Science. I congratulate the Government on their announcement.

Dr. Brian Iddon: I am not a member of the Select Committee on Science and Technology, but I join other hon. Members in congratulating its Chairman and members on a report that has obviously influenced Government thinking. The announcements yesterday and today will benefit the British science base.
Some of the world's best scientists and engineers are still produced by British universities, and Britain is still at the cutting edge of research in many areas. Those features attract people from throughout the world to study in the United Kingdom. However, over the past decade there has been an increasing number of warning signs that we are losing our world place. Undergraduate and postgraduate students are opting to study in the United States and Japan and in our continental partner countries.
As we all know, the problem has been a shortage of funding. In 10 years, United Kingdom universities have had a 40 per cent. per capita cut in funding, and that is a great deal of money. I was pleased by yesterday's announcement and by those today that were part of the comprehensive spending review. This has been a great week for British science, and I congratulate the Government on that.
I should like to highlight one or two problems in the British science base, and I shall start by examining the research assessment exercise. When it was set up, the publications that were assessed by those who were taking part in it were those that had been published in learned peer review journals. Departments in many universities, such as the one in which I used to teach, carry out equally valuable applied research and publish the results in different ways, often in reports to Government and industrialists.
The problem with the research assessment exercise is that it has never taken account of that important work. Consequently, departments that employ staff to conduct such research either have to give it up or suffer under the research assessment exercise. Many excellent science and engineering departments slipped down the league table while the creamed-off top 12 accelerated up. That is a


real difficulty with the research assessment exercise, and I hope that in the near future the Minister will review the process in some way.
Another objection to the research assessment exercise is the way that it creates, to use a football analogy, divisions between universities and even transfers. One university may poach staff from another's excellent science or engineering department, and that was especially prevalent when large research groups published many papers. Even those who conduct the research assessment exercise have recently realised that that is crazy, and have stopped it and started to review departments in a different way.
Researchers who are being judged in a research assessment exercise are reluctant to collaborate either in their own departments or with those in other departments and universities, and they rarely collaborate with industry. Questions such as, "Who was the senior author and who should take the most credit for this publication?" are often asked. I want that to end. Like my hon. Friend the Member for Milton Keynes, South-West (Dr. Starkey), I should like to see more collaboration between organisations, because that brings excellence to the science base and, of course, in the past, scientists and engineers have always travelled the world collaborating. We should encourage them to do that much more in future.
The other difficulty with the research assessment exercise, as we have heard, is the amount of paperwork that it generates. I began teaching in universities at Durham in 1964 and I ended at Salford in 1997, at the election. The amount of paperwork that university lecturers have had to deal with over recent decades has been immense, compared with the amount that I dealt with as a new lecturer at the university of Durham. I ask the Minister to review the research assessment exercise and to try to cut out some of its worst features.
The shortage of research money has caused university staff to make more and more grant applications in order to succeed. I have been party to making grant applications to the European framework programme. The complexity of the forms, the amount of paperwork involved and the amount of organisation necessary to get collaborators to collaborate across Europe mean that applications take weeks of work. The burden of paperwork and the shortage of research funding, which makes more grant applications necessary, have burdened university researchers in the past decade like nothing before.
University researchers are expected to justify themselves not only externally, but within the department and the university, which generates piles of paper. That must stop if we are to hold pole position in our research base.
Does every university need to conduct research? That question is often asked, especially as all the former polytechnics have become universities. In my opinion, if one is to be an excellent teacher, it is essential to be involved in research. Reading 30 journals a month kept me up to date and enabled me to enthuse my students when I was teaching chemistry. Those who are not doing research will not have the same enthusiasm to pass on their knowledge to students. I very much regret that many departments in our universities are not conducting

research. I am not in favour of teaching universities and research universities. All universities must teach and also conduct some research.
I never supported the previous Government's conversion of all the polytechnics into universities in one fell swoop. It should have been done much more slowly, as each one reached the right quality. Many of the polytechnics that became universities at that time had the right quality. I could name some, but it would be unfair to do so. I know, however, because I examined in them, that some of those polytechnics were not of the right quality at that time. They may be today, but they were not when they became universities. The conversion of all those polytechnics into universities put a huge burden on the funding of the entire higher education sector.
May I put in a plug for university salaries? If we are to attract the brightest people into teaching and research in our universities, the salaries must be available. When I became a lowly Back-Bench Member of Parliament, from being a reader in chemistry at Salford university, my salary went up by more than £10,000. That is not right. If we are to attract the best teachers and researchers, we must be willing to pay them. I have long been an advocate of a pay review body for the universities. I hope that some day the Government will take that on board.
I hope that the Government will look into the scandal of short-term contracts. I shall not dwell on that, as it has been mentioned more than once. Short-term contracts rarely carry pension rights, and one day the people who have been on one short-term contract after another will reap the difficulties that that will cause.
Increasingly, postgraduate students and other staff in universities are taking part in teaching. I have never minded postgraduate students demonstrating in laboratories, but they are not sufficiently qualified to lecture before classes of students.
There are many things wrong with the universities. We have had a weak science base for the past decade, if not 20 years.
I welcome the Government's announcements this week, and I congratulate my hon. Friend the Minister for Science, Energy and Industry on the enthusiasm that he puts into his brief. I am sure that, if he had not fought hard for the science base within the comprehensive spending review, we would not have seen the announcements this week.

Dr. Desmond Turner: Those of us on the Select Committee started out from the premise that the British science base was in a critical condition and that if it got very much weaker, it could start to collapse. That would be serious not just for the interests of science, but for the whole British economy. If we are to be a technology-based economy and we do not have a thriving science base, we go nowhere. Twenty years down the line, we could become a desperately poor country because our university science base has been criminally neglected.
It has been marvellous over the past two days to see my hon. Friend the Minister for Science, Energy and Industry and his Front-Bench colleagues riding to the rescue like the 7th cavalry. It has been heartwarming and, as members of the Select Committee, it makes us proud that our humble advice has been of service.


I am glad that the Minister's joined-up thinking has spread to the rest of the Government. I am now in the happy position of being able to applaud my right hon. Friend the Chancellor of the Exchequer for his important words in recognising the central role of science in the British economy. No longer can anyone dismiss scientific research as stuff that goes on in ivory towers or as an optional extra. It is not; it is central to everything that we do in this country.
Hon. Members have pointed to detailed difficulties that arise under the present system. My hon. Friend the Member for Milton Keynes, South-West (Dr. Starkey) has criticised the effect of the dual-funding arrangement. I have to take slight issue with her, because my reading of the dual-funding system is that the main thing wrong with it is that there was never enough funding on either side of the dual system. When there is a shortage of funding, all sorts of unfortunate things happen, because people are scratching around and problems arise such as those described by my hon Friend. Once there is adequate funding, the in-fighting can stop and one can take a more distanced look at how the system really functions and ensure that it operates properly.
My hon. Friend the Member for Bolton, South-East (Dr. Iddon) laid a great deal of stress on the research assessment exercise, as does the Select Committee report. The report is highly critical of the current working of the research assessment exercise, which operates against modern research in that it discourages interdisciplinary or inter-establishment collaboration. It almost promotes only those working alone. Modern science is not like that, and is increasingly not like that.
Having settled the immediate financial worries, the Minister clearly has many further considerations. However, I am confident that he will address them. Getting the research assessment exercise right is fundamental, and sorting out the details of the way in which the dual-funding mechanism works is vital. It is a great relief that the research councils are not getting their extra funds at the expense of Higher Education Funding Council for England funding. That is an important point, which the Minister made clear tonight.
What is important about this exercise is not so much the science—although that is important—as the political lessons that have to be learned. The United States has a technologically based economy, which operates from a thriving science base. The United States invests fabulous amounts of money by our standards—about $80 billion a year of Government money—on research and development. We cannot ever hope to match that amount. However, if we are to achieve results, we must ratchet up the amount that we spend, so that it is a reasonable proportion of gross domestic product.
In America, regardless of whether one is a Republican or a Democrat, everyone realises that science is essential. Until now, there has not been such a belief in the United Kingdom. The previous Government may have paid lip service to science, but they never put any money into it, running it down to a critical point. Should Opposition Members ever again have the extraordinary luck of coming anywhere near being in government, they had better not repeat that mistake. If they do, they will once again start to run the UK into the ground. However, now we have a Government who are building up science.

Science may not be the primary financial element in the comprehensive spending review, but it is one of the important and central elements.
It is fine to have basic science research, but we must also have innovative processes if we are to maximise and capitalise on the benefits that science can bring to our economy. I am happy to say that, in a few months, the Select Committee will offer the House more sage advice, which I hope will be equally useful to the Minister. If we get things right during this Government, in 20 years, we shall have an economy that would not have been possible without that action. I applaud the Minister and his colleagues.

Dr. Ian Gibson: I should like to go a bit further than to say that I am delighted, because I am ecstatic. If they would take me back, I might even go back to that laboratory and sort out the internal guttering. We may have had some of the best equipment in the world to do molecular biology, but every time it rained, water came through, which we saw on the benches.
Like other hon. Members in the debate, I welcome the Government's action. They are sending a very strong signal not only to Wellcome but to many other organisations, which will realise that the Government are committed to science, technology and engineering. Those other organisations will pile in. I tell those who say that we need more money that I think that that will happen, as the Government's signal is very strong.
I should like to say a few things about science, although I shall be brief, as I know that other hon. Members wish to speak. We live in a very exciting time. Climate change, biotechnology and the burgeoning world of information technology will have to be dealt with, and new ways will have to discovered to solve new problems.
I returned today from a visit with a British parliamentary group to Harvard and the Massachusetts Institute of Technology, where we met parliamentarians from Germany and the United States. Despite all our arguments about global warming, we ended up at a dinner with Newt Gingrich. We did not make much progress with him on the global warming issue. However, he said that he had not realised that we could not use cellular telephones in the United States, and that he would do something about it. My hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller) negotiated that matter rather brilliantly.
International competition is what it is all about in science and technology, and we must not fall behind. Although we have come a long way, we must continue to make progress if we are to benefit our economy. I tell the hon. Member for Harrogate and Knaresborough (Mr. Willis) that the Government's action on science and research has not started only in the past two days. A few months ago, the Chancellor provided £50 million for a new initiative to encourage universities to interact with industry and to start thinking—to use that word—entrepreneurially. The Government have shown over time a gradual building up to the commitment that has been demonstrated in the past two days.
Science affects foreign policy. New drugs developed in countries such as the United States and Britain are important in helping countries to overcome medical and


economic problems caused by AIDS, for example. Science is therefore part of meeting our foreign policy commitments.
Much has been said about the research exercise, but I would add one thing. Interdisciplinarity is very important. The old words have to change, and we need new types of committees to decide where the money goes, breaking down the old disciplines. As for training, too many young people are stuck in laboratories to do PhDs, and are simply told to get on with them. There is as yet no real commitment to training them to develop in the emerging world of science of which small businesses form a part.
I shall conclude—everything has been said about what needs to be done. Surely we should rejoice about the sudden emergence of a commitment to science and technology, the like of which we have not seen since the white heat of technology. It is something of which we should all be proud. The Americans doubled their science budget, and we are now part of a global culture in which science and technology have rightfully come home.

Mr. Nigel Beard: I welcome the substantial accord between the Science and Technology Committee's report and the Government's comments. Like all my colleagues on the Select Committee, I also welcome yesterday's announcement of substantial funding, which not only gives practical force to the Select Committee's recommendations but demonstrates the Government's commitment to the role of science at the heart of the national economy and our national culture.
The report and the Government's response to it mark an end to an era in which the role and purpose of university research became confused and in which its strength and confidence declined. Yesterday's announcement means that the Government have accepted their responsibility for the essential funding of university research.
The message from the previous Government was that research in universities should be targeted on economic application. As such, it was becoming ever more short-term. That is not what has given this country a reputation for being the creative engine of world science. Moreover, it is not what industry wants. Industry does not want a cheap source of development carried out by institutions that are not designed, staffed or equipped for it. Industry wants universities to be a source of new, creative ideas and new knowledge, and a source of able recruits well trained in modern research methods.
Industry can and should take that fundamental knowledge and understanding and apply it in the development of technology or products targeted at particular markets. That is what industrial research and development is for. Industry is in the best position to understand markets.
Some university research may be in the mainstream towards applications, and some may be driven by the curiosity of individuals. Both elements have to be catered for. We have struck an arrangement in the dual funding system that does just that. The support that has been announced for the Higher Education Funding Council

ensures that universities will be able to speculate and generate the new ideas that might not be thought of if we stick within the tramlines of established wisdom.
A major finding of the Dearing report was the parlous state of university capital support for research. For example, many researchers were working on instruments that were inferior to those currently used in industry. The Select Committee's estimate of the deficiency was £410 million to £430 million, and the Minister's generosity has surpassed that with the £600 million joint funding. It was vital that the deficiency should be made good; without it, there was substantial evidence of a likely dramatic decline in the standard of our university research.
The deterioration, once rectified, must not be allowed to develop again. Research councils and all externally commissioned research must bear the full indirect costs of the work they sponsor. Again, the Government's extra funding of research councils will enable them to meet that extra cost without reducing the volume of research that they sponsor.
Not all universities have appeared to be in a position to assess the full cost of their projects. Without such arrangements, the proposals cannot work. If every university works out its own scheme, there will be a prodigious waste of effort. Such a variety of schemes would bewilder external sponsors. I welcome the proposals to develop a common scheme of costing under the auspices of the Committee of Vice-Chancellors and Principals.
I support what has been said about the inadequacy of short-term contracts and the jeopardy in which they put those who are engaged in research, who are the foundation of our scientific capability. They are a national asset. However, those points have been made.
I should like to talk about another aspect of university research—transferring it out into the wider national economy. Although I do not believe that university research should be over-constrained by the needs of industry, it is important that the results from universities can be easily transferred to industry. The chemical and pharmaceutical industries are good at that. The engineering industry is less good.
The major problem lies in transferring results and applying them in small or medium companies that have little technological expertise. In Germany, that is done with the help of the frauenhofer institutes, which undertake contract development for small companies that provide the market targets. That is a spur to innovation in small and medium companies and helps to transfer scientists and technologists from academic research into that sector of the economy—the mittelstand.
We have no such tradition of intermediate institutions. The Engineering and Physical Sciences Research Council is to be congratulated on establishing a few similar institutions, called Faraday institutes. I welcome that important pilot scheme. However, that is not truly the role of a research council. The aim is for research to be commercialised. It would be more appropriate for the Department of Trade and Industry to take the initiative over and expand it, perhaps in conjunction with business links. In that way, this country may better grow internationally competitive technology-based small companies. It would help to ensure that the fruits of the country's major strength in science and technology contribute to our prosperity.

This country has a record of unsurpassed achievement in the sciences that was in danger of lapsing. Yesterday, because the Government shouldered their unavoidable responsibility, that danger is passing. In the 21st century, Britain will return to the forefront of science and technology. The challenge is to ensure that those skills are applied through creative design and commercialisation to create national prosperity. It is for British industry to take up that challenge.

Mr. Christopher Chope: I congratulate my hon. Friend the Member for Rayleigh (Dr. Clark), the Chairman of the Select Committee, and Committee members on a thorough and well researched report that builds on the Dearing committee's comments and concludes with unanimous and valuable recommendations. The Government responded on 15 June. That was before the publication of the comprehensive spending review, but there seems to have been some understanding of what the conclusions of the review would be.
We welcome the additional taxpayer resources for science research, amounting to £471 million over the next three years. We do not go as far as the hon. Member for East Carmarthen and Dinefwr (Mr. Williams), who described the move as superlative, or the hon. Member for Norwich, North (Dr. Gibson), who was ecstatic. My hon. Friend the Member for Meriden (Mrs. Spelman) was right to draw attention to the fact that we are talking about not just Government funding for research, but overall expenditure on research and development. One can see clearly from figure 1 of the Select Committee's report that Government expenditure on civil research and development was cut significantly in real terms during the lifetime of the previous Labour Government. The Minister may be embarrassed to be reminded of that, but it is in the report.
The Opposition warmly welcome the generosity of the Wellcome Trust and the £400 million of new money that it will provide over the next three years. Would it be fair to describe that as money that would not otherwise have been spent on research? Would it have been spent in some other way on research unless the Minister had managed to garner it for the infrastructure project? Is it totally new money?
It was interesting to note the terms of the quotation of Dr. Michael Dexter, the director of the Wellcome Trust, in yesterday's Government press release. He said:
In proposing this partnership with government, the Trust was quite clear that it would not invest money that would merely substitute for government funds, or leave a bad position on current funding unrectified.
We sought assurances that even in the absence of the £600 million joint capital fund, the government would be making significant increases in basic science funding after allowing for inflation.
That clearly suggests that the Wellcome Trust proposed the partnership and that the Government were responding to its terms in ensuring that, as a condition of that funding, a significant sum would be raised in addition to allowances for inflation.
Hon. Members will be familiar with the detail of the science provisions set out in a written answer at columns 47–8 of yesterday's Hansard in response to the hon. Member for Hull, West and Hessle (Mr. Johnson). The first point that comes across very clearly is that this

year's cash baseline of £1,349 million is carried across in each of the next three years without any increment for inflation. That means that the additional programmes of £61 million for next year, £150 million in the year after and £196 million in 2001–02 can only be at the expense of real cuts in current provision if they are to be regarded as truly additional.
Inflation at 2.8 per cent. will erode the value of the cash baseline next year by £37 million, by £78 million in 2000–01 and by £121 million by 2001–02. Therefore, of the £407 million announced for additional programmes, £236 million will be needed just to maintain the value of the existing cash baseline. An amount of £171 million for additional programmes does not make as good a headline as £407 million.

Mr. Battle: Perhaps the hon. Gentleman will read the detail—and accurately. One of the things that we spelled out when we came to office was that we accepted the previous Government's figures. The previous Government left me a budget increase of 1.9 per cent., which is less than the rate of inflation, with which I have been struggling all year. I hope that he is pleased to note that there will be real-terms increases over the 1998–99 baseline of 7.3 per cent. next year, of 12.7 per cent. the year after and of 14.8 per cent. the year after that. When I studied arithmetic, that added up to an increase.

Mr. Chope: Hon. Members will be able to judge for themselves by looking at the written answer in Hansard for 13 July, columns 47 and 48. The Minister conveniently includes the infrastructure funds in the figures to which he has drawn the attention of the House. Within the much-vaunted £1.1 billion headline figure there is no allowance for inflation. As I have said, inflation over successive years will erode the existing cash baseline by £236 million.
I hope that, in answering the debate, the hon. Gentleman will explain the extravagant claims in yesterday's press release, which I am afraid have obviously taken in some of his hon. Friends, about the £407 million for the research councils. Will that meet the current and capital costs of new project funding in priority areas such as life sciences? If so, how can it be spent without adversely affecting existing provision, for which no separate allowance for inflation has been made?
Does the Minister accept that, if £407 million will really be directed to new project funding, that means cuts of £236 million elsewhere?

Mr. Alan W. Williams: May I explain to the hon. Gentleman something about all the numbers in the table in yesterday's press release—which he is quoting—and in today's statement on the comprehensive spending review? His point about inflation could be made about all those numbers. They are all expressed in real terms, so any inflation from this year to next year, from next year to the following year, and so on, would be added on to those figures anyway. They are real-terms figures.

Mr. Chope: I am sorry that the hon. Gentleman is not following Hansard, which gives a cash baseline and carries it across in actual cash terms. There is £1,349 million for 1998–99, for 1999–2000, for 2000–01


and for 2001–02. There is no allowance for inflation, but there are sums of money for additional programmes and for the infrastructure funds.
I am simply warning people who may be taken in by the Government's rhetoric that an allowance for inflation must be made before one can understand the real value of the extra money.
Page 78 of the comprehensive spending review White Paper says:
the Government will invest significant new resources in the Higher Education Funding Council for England (HEFCE) to support research—together with new arrangements to ensure that HEFCE and the Research Councils work together to deliver better value, transparency and targeting in the use of research funding".
Reading that, one's natural reaction was to look through the White Paper for the Department for Education and Employment's spending plans and for further clarification of what might be meant. The only information was repetitive. Paragraph 6.13 states:
For both Further and Higher Education extra resources will be earmarked for infrastructure, equipment and an expansion of student numbers. This will be in addition to substantial new funding for scientific research, complementing additional provision available through the Research Councils.
That is confusing, because, although the Government may have produced what they call a comprehensive spending review, they have not made a comprehensive announcement about its consequences that incorporate the funding that will come from the DfEE through the HEFCE. That is significant, because we know that during the Select Committee's discussions a view was taken that the issue of infrastructure should properly be the responsibility of the Higher Education Funding Council for England and the DfEE rather than the Office of Science and Technology.
Indeed, the Minister himself, in giving evidence to the Select Committee, said that he did not regard it as his responsibility to deal with problems relating to infrastructure. It is a matter for some concern, or suspicion, that we now find that the extra money being made available for the infrastructure funds seems to be under the control of the Minister's Department rather than that of the HEFCE.
I hope that when the Minister gives his response he will deal with the questions about the public-private partnership deal with the Wellcome Trust and tell us whether the £100 million for high-intensity X-rays is part of that public-private partnership. [Interruption.] The Government Whip knows that we agreed to have 10 minutes each for the wind-up, and I have given way on two or three occasions.
I shall conclude with a question. How will the Government ensure that the number of companies established annually as a result of the public sector science base will increase by 50 per cent. by the end of this Parliament? Is it salesman's puff or is there a business plan to support it?

The Minister for Science, Energy and Industry (Mr. John Battle): I am grateful to the Chairman of the Liaison Committee for choosing this subject for tonight's debate. The health of the United Kingdom science and

engineering base, especially our universities, is essential to the future economic prosperity and quality of life of our citizens as we move forward into the 21st century. I am glad that this topic is on the Floor of the House tonight.
I compliment and congratulate the hon. Member for Rayleigh (Dr. Clark) on his work as Chairman of the Select Committee on Science and Technology. I also congratulate the superbly qualified and dedicated members of that Committee. Its reports are treated seriously within the House, and should be read far and wide throughout the country. The Select Committee has managed to push its work on science and technology out of the Committee Corridor and on to the Floor of the House; indeed, it has pushed it higher up the Government's agenda. I welcome that and congratulate the Committee on doing what I call basic foundational work, which has gone unacknowledged for far too long both inside and outside the House. It is a pleasure to be here tonight, even though we are cramped for time because so many hon. Members wanted to participate in a debate, at last, on science and technology.
Our announcements over the past two days will transform our science and engineering base and modernise the UK's research performance. We have responded positively to the Dearing committee's recommendations and concerns about the research infrastructure in universities. We have also now responded positively to the Select Committee's March report, although we had to send a holding reply in June.
The Select Committee referred to the need for substantial and sustained investment. I hope that the substantial increase in Government expenditure announced over the past two days represents the sort of investment for which it called. It sets the scene for the longer term over the next three years. We have listened to the Select Committee and taken note of its report—but, more than just listen, we have acted positively and firmly.
The fundamental message from the comprehensive spending review is that the Government are determined to ensure that we quite literally invest in the future. Our plans for science represent an innovative step change—a step forward that will take us into the 21st century. Dearing made it clear that university research infrastructure had been allowed to run down. We inherited a backlog of under-investment from the Conservative Government, so I do not take too kindly to Conservative Members quoting reductions and cuts that were the responsibility of their Government. I inherited the position, but we are now making the necessary changes.
Dearing proposed a £400 million loan fund for equipment and a further fund for buildings. As a stop-gap measure, pending the outcome of the comprehensive spending review, far from moving away from commitments to infrastructure, we have boosted the joint research equipment initiative. We agreed with the Select Committee that it was not sufficient to deal with the whole problem and that more funding was required. That is why we and the Wellcome Trust have set up a £600 million fund to provide grants for building new laboratories and refurbishing existing laboratories' equipment and other infrastructural needs.
I stress that, while at least half of the funding will be in the biomedical area, the fund will cover all science and engineering research. It is a ground breaking and, perhaps, the biggest-ever Government-led public-private science partnership. It will make a major impact on university research.

Mr. Dalyell: Will my hon. Friend confirm that all Wellcome funds are independently refereed?

Mr. Battle: Yes, that has been built into the proposal. There are no strings attached.
We are building an infrastructure of opportunity to ensure that our country is equipped and prepared for the competitive scientific and technological challenges of the 21st century. The Wellcome Trust is a major contributor to the funding of biomedical research in this country, and is the largest provider of private sector funds for university research. The new arrangements will be overseen by the Director General of Research Councils and the director of the Wellcome Trust who, together with their staffs, ought to be complimented on the constructive work that they have put into the comprehensive spending review and the joint initiatives. The arrangements will also bring together the expertise of the research councils, the funding councils and the trust.
We also announced additional funding for the science budget for new projects in priority areas such as biomedical research connected with the exploitation of the human genome. That research will lead to new industries, and will transform our lives in what I call the post-genome era of the 21st century, when things will be very different. The Wellcome Trust announced it will provide a further £100 million towards the cost of a new synchrotron x-ray machine, which will be essential to determine the structures of complex molecules and materials in a wide range of subjects—not just in the biomedical area.
Together, those announcements amount to a huge additional investment of £1.1 billion over the remainder of this Parliament. Today, it has been announced that an additional £300 million will be made available from the Higher Education Funding Council for England for research. In total, that makes £1.4 billion of additional funding for research—£1.4 billion more than the plans we inherited from the Conservative party, which was sending science in a downwards direction. We are building it back towards the future. That is good news and a clear vote of confidence by the Government in the UK science and engineering base. More importantly, it is a vote of confidence in the researchers themselves. 
We have taken action to put the UK at the forefront of the next generation of scientific research and the scale of investment will make a dramatic difference. Our researchers will be able to compete more fully and collaborate more effectively with their overseas colleagues. We can now look forward to a significant contribution to those key areas of scientific research that will be important for the next century, especially in the life sciences—but not only there—which hold out so much promise in terms of transforming our health service and creating the industries of the future.
The Dearing report made it clear that there was a need to improve the management accounting within universities, to identify the full cost of research and to enhance the transparency of research funding.

The Dearing report argued that universities did not have enough funding to cover the indirect costs of research and proposed that the science budget should be increased to enable the research councils to increase their contribution to overheads from the 46 per cent. of staff costs on their grants to full overheads. It is argued that that would require the universities to put in place proper cost accounting, which would ensure that they could properly cost their research contracts with industry and Government Departments.
Dearing also suggested that the infrastructure problem should be dealt with through loan pools, requiring universities to pay back the loans. Dearing saw that as a way of improving the management of research within universities. We considered the infrastructure situation to be so serious that it needed immediate action. Today's plans do that in no short measure by means of direct grants, rather than loans. In other words, we have taken action now, and it has been warmly welcomed by the House today.
Nevertheless, the Government are no less anxious than Dearing that there should be better accountability and transparency in university research funds, which must be used as cost-effectively as possible. My right hon. Friend the President of the Board of Trade announced that there would be a review of the funding arrangements for research. The review would ensure that the funding councils complement the research councils, and that they all work together to develop and deliver the best value for money, transparency and targeting in the use of research funds. Therefore, she has asked the Director General of Research Councils to take that forward in the funding councils to ensure that all those affected have a say in how the arrangements are devised. At this stage, there will be no change to the balance of the respective responsibilities for overheads between the funding and research councils. The dual support system remains in position. It is secure and strengthened.
In every debate that we have had on science and the development of science policy, a continuing theme has been the need to ensure that we exploit to maximum effect the huge benefits of our science and engineering base. We need to ensure that we make best use of our science and that the work of our universities is carried forward not only to improve the quality of life but to deliver wealth and to ensure the jobs of the future. That is why we recently launched the university challenge fund in a joint venture to provide the seedcorn for universities and to enable parts of the science and engineering base to develop the commercial potential of the research.
On a wider issue, in March, the DTI and the Treasury issued a joint consultative document entitled "Innovating for the Future". We sought replies to that consultation to ensure that we back up the work done in universities and see it into productive work in future.
We came into government saying that we would accept the brackets of the budgets that we inherited from the previous Government until we carried out a comprehensive spending review. The purpose was to set out our priorities—

It being Ten o'clock,

the debate was interrupted.

Question deferred, pursuant to paragraph (4) of Standing Order No. 54 (Consideration of estimates).

Mr. Deputy Speaker, pursuant to paragraph (4) and (5) of Standing Order No. 54 (Consideration of estimates), put the deferred Question on Estimates and the Question necessary to dispose of proceedings on the other estimate appointed for consideration this day.

ESTIMATES 1998–99

Class IV, Vote 1

Question,
That a further sum not exceeding £ 142,691,000 be granted to Her Majesty out of the Consolidated Fund to complete or defray the charges which will come in course of payment during the year ending on 31st March 1999 for expenditure by the Intervention Board—Executive Agency in giving effect in the United Kingdom to the agricultural support provisions of the Common Agricultural Policy of the European Union; other services including BSE emergency measures; and administration.

put and agreed to.

Class IV, Vote 2

Question,
That a further sum not exceeding £389,128,000 be granted to Her Majesty out of the Consolidated Fund to complete or defray the charges which will come in course of payment during the year ending 31st March 1999 for expenditure by the Ministry of Agriculture, Fisheries and Food on operational expenditure, agencies and departmental administration including BSE related measures; promote food safety; take action against diseases with implications for human health; safeguard essential supplies in an emergency; promote action to alleviate flooding and coastal erosion; to protect the rural economy particularly in Less Favoured Areas; encourage action to reduce water and other pollution and by other measures to safeguard the aquatic environment including its fauna and flora; improve the attractiveness and bio-diversity of the rural environment; implement MAFF's CAP obligations efficiently and seek a more economically rational CAP while avoiding discrimination against UK businesses; create the conditions in which efficient and sustainable agriculture, fishing, and food industries can flourish; take action against animal and plant diseases and pests; encourage high animal welfare standards; provide specialist support services, allocate resources where they are most needed; manage and develop staff: undertake research and development; and provide for the expenditure of the Ministry's executive agencies.

put and agreed to.

Class V, Vote 2

Question,
That a further sum not exceeding £719,838,000 be granted to Her Majesty out of the Consolidated Fund to complete or defray the charges which will come in course of payment during the year ending on 31st March 1999 for expenditure by the Department of Trade and Industry on payments to the Science Research Councils, the Royal Society, the Royal Academy of Engineering; OST initiatives; fees payable under the Animals (Scientific Procedures) Act 1986; and Research Council Pensions.

put and agreed to.

ESTIMATES AND SUPPLEMENTARY ESTIMATES 1998–99

MR. DEPUTY SPEAKER then put the Question required to be put pursuant to paragraph (1) of Standing Order No. 55 (Question on voting of estimates &c.).

Resolved,
That a further sum not exceeding £110,476,127,000 be granted to Her Majesty out of the Consolidated Fund to complete or defray the charges for Defence and Civil Services for the year ending on 31st March 1999, as set out in House of Commons Papers Nos. 635, 636, 637 and 783.

Ordered,
That a Bill be brought in upon the foregoing resolutions and the two motions of 6 July relating to estimates: And that the Chairman of Ways and Means, Mr. Chancellor of the Exchequer, Mr. Alistair Darling, Mr. Geoffrey Robinson, Dawn Primarolo and Mrs. Helen Liddell do prepare and bring it in.

CONSOLIDATED FUND (APPROPRIATION) (NO. 2) BILL

Dawn Primarolo accordingly presented a Bill to apply certain sums out of the Consolidated Fund to the service of the year ending on 31st March 1999; and the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed. [Bill 224.]

BUSINESS OF THE HOUSE

Motion made, and Question put forthwith, pursuant to Standing Order No. 15 (Exempted business),
That, at this day's sitting, the Registration of Political Parties Bill may be proceeded with, though opposed, until any hour.—[Mr. Dowd.]

Question agreed to.

Mr. Ian Bruce: On a point of order, Mr. Deputy Speaker. Before we come to the important business of the Registration of Political Parties Bill, I seek your guidance on how I should proceed.
Yesterday, I raised a point of order with Madam Speaker regarding the answering of parliamentary questions, particularly in relation to questions that I had put to Ministers about how they were dealing with Members' correspondence. I hope that all hon. Members are interested in ensuring that we receive prompt replies from Ministers.
I tabled a series of questions some months ago, and received answers from all the different Departments. Yesterday, after giving Ministers a week to say how quickly they were responding to Members' letters—we had a good response from the Department of Trade and Industry—most Ministers said that they were delaying answering. Some of those questions were referred to the Chancellor of the Duchy of Lancaster, and he has given us what he describes as a substantive reply, which is that he will publish the figures shortly.
My point of order to you, Mr. Deputy Speaker, is that questions tabled by Members are usually answered on the record and printed in Hansard. If questions are answered by way of some sort of published list, which will be given out by a Minister on behalf of all his colleagues, that will not be published in Hansard, and the public and hon. Members will not know what Ministers are doing in terms of responding to letters.
I seek your guidance, Mr. Deputy Speaker, about how we can get on the record perfectly proper requirements to find out what Ministers are supposed to be doing in this place, so that we do not find yet again that information is published in newspapers or in documents in the Library, but not in Hansard.

Mr. Deputy Speaker (Mr. Michael Lord): I understand the hon. Gentleman's concern about this matter, but I am sure that the points that he has made will have been heard by those on the Government Front Bench this evening.

Orders of the Day — Registration of Political Parties Bill

As amended (in the Committee), considered.

Clause 10

SPEAKER'S COMMITTEE

Mr. A. J. Beith: I beg to move amendment No. 1, in page 4, line 11, at end insert—
'(1A) A party whose application under sections 3, 5, 6 or 18 is refused may appeal to the committee against the registrar's decision and the committee's determination of the appeal shall be final.'.

Mr. Deputy Speaker (Mr. Michael Lord): With this, it will be convenient to discuss the following amendments: No. 2, in page 4, line 11, at end insert—
'(1A) The committee shall have the additional functions of—

(a) considering any representations which may be submitted to it about the operation of—

(i) the system of registration established under this Act, and
(ii) the amendments to the Parliamentary Elections Rules contained in Schedule 2; and


(b) making to the House of Commons any recommendations which seem to it to be appropriate in the light of those representations and which are intended to secure—

(i) that any deficiencies in the system of registration are rectified; and
(ii) that returning officers apply their discretion under rule 6A of Schedule 1 to the Representation of the People Act 1983 (Nomination papers: name of registered political party) in a manner which is consistent both over time and as between different parts of the United Kingdom.'.




No. 3, in page 4, line 11, at end insert—
'(1A) A party whose application under sections 3, 5, 6 or 18 is rejected by the registrar may appeal to the committee against the decision of the registrar.'.

Mr. Beith: The amendment would allow a party whose application is refused to appeal to the Speaker's Committee against the registrar's decision. It would apply to decisions under clause 3 on grant of applications, clause 5 on registering emblems, clause 6 on changes to the register, and clause 18 on refusing an application during the transitional stage. The Committee's determination would be final.
Without the amendment, the Bill would have no specific mechanism for appealing against the registrar's decision, so the only challenge possible would be judicial review. We hope that one of the outcomes of the Bill will be to reduce the number of legal challenges caused by attempts to mislead voters. Judicial reviews are costly and time-consuming, and can involve parties in heavy expenditure. There should be a quick and decisive method of reviewing decisions, which will not place a significant burden on the registrar or on political parties.
It may not be possible to resolve a judicial review before an election at which the party challenging a decision wishes to field candidates. It would be unjust if a party could not use a name that it was seeking to register


at an election solely because the review had not been determined. The amendment gives that appellate role to the Speaker's Committee.
Amendment No. 3, tabled by the Conservatives, has the same effect, but does not specify what would happen if a party wants to challenge a decision by the Speaker's Committee. It says that any decision would be final, as did an earlier amendment moved by the Conservatives in Committee. We are therefore at one on this matter.
The Conservatives raised the issue in Committee, and the Minister replied:
I do not see the use in an appeal to the Speaker's Committee if the registrar had acted on that Committee's advice when refusing an application."—[Official Report, Standing Committee A, 23 June 1998; c. 55.]
There was strong pressure on the Minister to reconsider the matter. He said that he would think about what had been said, and look at the matter again if there was room for doubt. This is an opportunity for him to do so, and we look forward to hearing what he has to say.
Amendment No. 2 has a rather wider purpose. It would give the Speaker's Committee the additional function of considering representations about the operation of the registration system and the rules for returning officers, and making recommendations to the House to rectify any deficiencies in the system.
The Bill is necessary to facilitate the systems to be used for the Scottish Parliament and the Welsh Assembly elections, and for the list system to be used in European elections. However, it has another effect and intention: to reduce the likelihood of confusion at elections when candidates try to use confusing party names.
Many areas are left unclear, and will need to be reviewed. The amendment's purpose is to enable the Speaker's Committee to do just that. For example, the Bill does nothing to prevent candidates from choosing to use another candidate's name with the intention of confusing voters.
I fondly remember that, when Jim Callaghan first proposed that description should be allowed on ballot papers, he said:
I would hope that most people who stand for election would have a proper sense of responsibility."—[Official Report, 18 December 1968; Vol. 775, c. 1404.]
There is a touching Jim Callaghan naivety about that comment. In the event, it did not turn out to be so. As my hon. Friends the Members for Torbay (Mr. Sanders) and for Winchester (Mr. Oaten), and various other hon. Members elsewhere in the House know from bitter experience, hope is not enough.
Amendment No. 2 would allow the Speaker's Committee to consider any representations it received about how the system operates, both at registration level and at returning officer level, and to make recommendations. A number of other issues would arise if it had that power. They will come up anyway, and will have to be considered by somebody. For example, the registrar and the returning officers will have to consider the historical and traditional associations of a particular word or phrase when examining applications for registration or inclusion on the ballot paper. That process is necessary, to reduce the likelihood of inconsistency between returning officers or between the registrar and returning officers.
Some confusing matters became apparent in Committee. For example, the Minister implied that the word "Tory" would be protected under the Bill because it is
commonly used to refer to the Conservative party."—[Official Report, Standing Committee A, 18 June 1998; c. 13.]
He added that the word "Liberal" would not be protected in the same way. I have to tell him that "Liberal" is commonly used to describe the Liberal Democrats; indeed, I heard the Chancellor of the Exchequer use it no fewer than four times this very afternoon to describe the Liberal Democrats. In the hearing of many hon. Members who are in the Chamber, he vividly demonstrated that that word fits exactly the criterion ascribed by the Minister to the word "Tory".
My hon. Friend the Member for Torbay made that point in Committee, and the Minister's words appeared to set in concrete decisions that would have to be made by the registrar and the returning officers. I hope that the Minister did not intend his words to be used in that way, and I have written to the Home Secretary to say that I hope that he does not think that that was the intention. Clearly the registrar and the returning officers will have to consider the matter themselves; if they cannot resolve it satisfactorily, the Speaker's Committee could appropriately review the issue.
I have mentioned candidates who use a false name. In Committee, we tabled an amendment to deal with candidates who change their name close to an election to one identical to, or designed to be confused with, the name of someone standing for a registered party. The Bill does not deal with that problem, but it is so cognate that it is likely to be raised once the Bill has come into effect. Again, that is an appropriate matter for the Speaker's Committee to consider.
Preventing candidates from using in their election literature names or descriptions that they have been prevented from using on the ballot paper also came up in Committee. The Government's view is that that is not a problem, because the parties will have no difficulty in making their identities clear in their campaigns. The Minister's argument is that the rogue candidate would not want to make public his activities if he intended to benefit primarily from the confusion of voters confronted in the voting booth with a name that they associate with another party.
If the rogue candidate got that far, the assumption that the Government are making is that it would have been better for him not to have done much campaigning or to have used a false name in literature, but I am not convinced by that explanation. It may work in some cases, but it will not work in others. The Speaker's Committee will have to come back to that issue, and it would be appropriate if it had a broader power to enable it to do so.
This amendment would not be necessary if we had an electoral commission, which would be the most appropriate body to deal with many of these disputes, arguments and interpretations about electoral law and procedure. It has never been ideal that so many rulings should come out of the Home Office; that is not a criticism of it, but it is headed by a Secretary of State to whom it owes its primary responsibility. Home Office officials take their wider responsibilities seriously, but they are the servants of the Home Secretary of the day, and it would be much better in the longer term if we had an electoral commission to deal with these matters.
We are developing so many elections and referendums, from which so many questions can arise, that a commission would be an appropriate mechanism. Indeed, it would have been better to have a commission rather than use the Home Office or the unsupported conclusions and jurisdiction of the returning officer to resolve all these matters. We do not have a commission, so the Speaker's Committee, which is being set up under the Bill and which will have an important role in this area, could usefully have its functions widened to deal with some of the matters that I have raised. I suggest that to the Government as a way of dealing with a group of problems that will certainly come down the track, and which will have to be dealt with by someone.

Mr. John Greenway: One of the most important debates in Committee concerned appeals, and it mainly involved a lengthy exchange between the Minister and my hon. Friend the Member for West Dorset (Mr. Letwin). The hon. Member for Colchester (Mr. Russell), who made the briefest of interventions in support of us, clearly understood the argument, and followed it closely.
In all but one respect, amendment No. 1 seeks to incorporate in the Bill the precise scheme of affairs that my hon. Friend thrashed out in debate with the Minister. They had a fascinating exchange, the Hansard report of which is worth reading by anyone seeking an in-depth understanding of the issue. The Minister smiles at the recollection of that joyous occasion.

The Parliamentary Under-Secretary of State for the Home Department (Mr. George Howarth): And the re-reading.

Mr. Greenway: Indeed.
For the purposes of tonight's debate, I shall attempt a brief resume of what we are trying to achieve. For the benefit of those who were not members of the Standing Committee, let me explain that the Bill's central objective is the registration of political parties. Parties with at least one member in the House of Commons—the hon. Member for Tatton (Mr. Bell) is not a member of a party—will enjoy the benefits of a first-stage registration process.
That will involve a party's registering its name with the registrar of companies. It may also register an emblem, and may subsequently apply to make any necessary changes. The registrar may refuse any such application for a number of reasons, which are set out in clause 3; but, under clause 18, he "shall refuse" an application if he thinks that the registered name is likely to be confused by voters with that of another party.
Clause 10 provides the opportunity for the Speaker to appoint a committee of Members of Parliament to assist the registrar. As the clause clearly states, before the registrar decides,
he may seek advice from a committee of Members of the House of Commons".
It should be noted that the clause does not state that the registrar "must" or "shall" seek advice. We think that entirely reasonable, because not every application would require advice. The clause, however, does not state that the registrar must accept or act on such advice—although,

arguably, he probably would. In any event, the key question is whether the process is likely to satisfy an aggrieved party whose application has been refused.
As was shown by the exchange between the Minister and my hon. Friend the Member for West Dorset, it is reasonable to expect that the registrar would refer any contentious matter to the committee. That is clearly the intention, although the decision would still rest with the registrar rather than the committee. We think that an applicant should have a formal mechanism to allow an appeal to the committee if an application is rejected. Our purpose is essentially to make it clear that the applicant can insist that the matter be considered by the committee, with the guarantee that the committee could seek to influence the outcome.
Let me explain where we differ from the Liberal Democrats. The right hon. Member for Berwick-upon-Tweed (Mr. Beith) alluded to this. On the basis of the exchange in Committee to which I have already referred, we expect the Minister to agree with us. The real question is where the final decision should rest. We think, on balance, that it should rest with the registrar rather than the committee, which is why the wording of our amendment differs slightly from both the wording of the Liberal Democrat amendment and that of the amendment that we proposed in Committee.
The House should bear it in mind that a registrar, person sole, can reach a decision. Decisions made by committees—especially Committees of the House of Commons—although free and open, cannot be guaranteed to produce clear-cut answers. We agree with what the Minister said in Committee: the final decision must rest with the registrar.
Our amendment is a sincere attempt to incorporate in the Bill the order of events that, as he intimated in Committee, the Minister expects will happen in practice. To be certain that that does happen in practice, we should make it clear in the Bill.
There is no mechanism in the Bill for a party that is unhappy at the registrar's decision to appeal or to take action against it. That could become extremely important for the Liberal Democrat party and for some of its former friends who masquerade as Liberals. If I catch your eye, Mr. Deputy Speaker, I may refer to that point again on Third Reading, should we proceed to Third Reading tonight.
We are satisfied that a form of appeal would be a judicial review of the reasonableness of a registrar's decision. Such reviews are likely to be rare, not to mention expensive, which is a consideration for political parties that do not have much money. They would be even less likely if applicants could make formal representation to the Speaker's Committee. The House should seek to determine not whether our amendment is a good idea and a necessary addition—we believe it is—but whether it is worded correctly. The Minister has the choice of accepting amendment No. 3 or tabling a similar amendment when the Bill is considered in the other place.
It is disappointing that the Minister has not tabled his own amendment, given the exchange of views that took place in Committee between him and my hon. Friend the Member for West Dorset. For the reasons I have stated, we think that our amendment No. 3 is preferable to amendment No. 1.


Amendment No. 2 addresses different issues, and is rather more elaborate. I am grateful to the right hon. Member for Berwick-upon-Tweed for his explanation, because he confirmed that it does not deal with the key issue of the right to make representations if an application is refused. It is stretching it a bit to regard the rejection of an application as a deficiency in the system of registration.
We have considerable sympathy with one aspect of amendment No. 2—the need to ensure consistency of application and interpretation of this legislation by returning officers. We raised the issue of guidance in Committee. The Minister agreed that guidance was necessary, and said that it would be issued, but he would not include such a requirement in the Bill. That apart, I am not sure that amendment No. 2 adds very much. There will be a natural progression, and many of these matters will have to be revisited in future.
We firmly believe, having given this matter some considerable thought, that the Bill should provide applicants with a formal right to make representations to the Speaker's Committee if their application is rejected. I commend our amendment to the House.

Mr. George Howarth: As the hon. Member for Ryedale (Mr. Greenway) said, amendment No. 1 is identical to the amendment proposed in Committee, which was withdrawn by the hon. Member for West Dorset (Mr. Letwin) after the debate to which the hon. Member for Ryedale referred. I confirm that we had a fascinating debate, and that the Hansard report of that debate made even more fascinating reading.
In Committee, I said that I would review the matter. I have done that, and I have no doubt that we are right. I do not say that smugly, but simply because I am convinced, after giving the matter a great deal of thought, that ours is the right approach. As the right hon. Member for Berwick-upon-Tweed (Mr. Beith) said, amendment No. 3 would have a similar effect, although it would achieve the ends by different means.
I can understand the reasons for seeking to provide some sort of appeal against a decision by the registrar not to register the proposed name or emblem of a particular party. I hope that I can persuade hon. Members that such a provision is unnecessary, however. If every aggrieved party decided to exercise such a right of appeal, it would simply give rise to unacceptable delay and bureaucracy in what is intended to be a straightforward and simple process.
It will be a matter for Madam Speaker to appoint the committee for which clause 10 provides, and I would expect it to consist of experienced hon. Members whose advice would be sought by the registrar when he faces a difficult judgment. In a difficult case in which the Speaker's Committee had advised the registrar that an application should be refused, there would be no point in providing a right of appeal to that committee, because to do so would be to ask it to consider an appeal against its own advice. That would be illogical and absurd.
In more straightforward cases in which the registrar refused an application without needing to refer it to the committee, to allow an appeal to the committee in every case would simply add to the delay.

Mr. Greenway: I hope that we can agree on this matter. We do not say that there would be a double reference to the Speaker's Committee. If it was clear to the person whose application had been refused that the Speaker's Committee had thoroughly considered all matters and had given advice, it is extremely unlikely that he would want to appeal again. Our key point is that the Bill does not provide the right to make representations at any time, and that is what we are trying to achieve.

Mr. Howarth: The hon. Gentleman is in a difficulty because he and the right hon. Member for Berwick-upon-Tweed have said, I think, that one of the reasons for the two amendments is that they do not think that in all circumstances people will behave reasonably. However, the hon. Gentleman has just said that most people will behave reasonably.

Mr. Greenway: indicated dissent.

Mr. Howarth: I think that that was the import of what he said.

Mr. Oliver Letwin: Will the Minister give way?

Mr. Howarth: I shall shortly give way to the hon. Gentleman, but I am anxious not to spend too long on this matter.
I think that the hon. Member for Ryedale was trying to argue that in most cases people will behave reasonably. The Bill's appeal procedure to allow people to seek advice from the Speaker's Committee is the most simple and straightforward way to resolve contentious issues. If, at the end of that process, someone still felt aggrieved—I accept that that may be possible—it would probably be because he was behaving unreasonably. If that were the case, why would we want to create yet another mechanism to take his grievance endlessly forward?

Mr. Letwin: Does not the Minister accept that the kernel of the matter is the possibility that the registrar will not take the same view as the applicant about the seriousness of the point, and may not refer the matter to the committee? As a result, the applicant may feel aggrieved and think that there is a prima facie case of unreasonableness. That would drive the whole process into a much worse corner in the form of judicial review, from which we hope to liberate the Minister by way of this innocuous amendment, which follows exactly the principles that he advanced in Committee.

Mr. Howarth: What the hon. Gentleman is suggesting could lead, technically, to every decision made by the registrar becoming part of an appeal process. When temperatures were raised, there would be a strong incentive for that, and the process would get clogged up. In straightforward cases where the registrar refused an application without needing to refer it to the committee,


there would inevitably be a delay in the process if an appeal were allowed in every case. If the registrar refuses an application, I believe that he will do so reasonably, having considered the case on its merits.
I hope that the House will agree that a committee of Members—reasonable people with a vast amount of experience of politics and the history of political parties—that has been established to provide the registrar with advice on the more difficult and contentious cases should not spend its time reviewing every application that has been refused by the registrar. The amendment could lead us down that path, even though that is not the intention. I stress that we would expect the registrar to refer any difficult cases to the committee for advice, and I shall make sure that he is well aware of that. I am confident that the concerns expressed in the House will be registered with the registrar.
In the unlikely event of the registrar's failing to refer a particular case to the committee and taking a manifestly unreasonable decision to refuse an application, it would be possible for the political party concerned to seek a judicial review on the basis that the registrar had acted so unreasonably that no reasonable person could have reached that view. I hope that that will not arise, although the possibility exists, for the reasons that I gave earlier.
An appeal mechanism as envisaged in the amendments is unnecessary. I therefore ask the right hon. Gentleman not to press the amendment.
Before I deal with amendment No. 2, I shall respond to the point made by the right hon. Member about the vexatious issue of candidates' names, in the circumstances that he mentioned. At the last general election, injunctions were granted in the High Court against spoiler candidates using a similar name and intending to stand against, for example, the right hon. and learned Member for North-East Bedfordshire (Sir N. Lyell) and my hon. Friend the Member for Halifax (Mrs. Mahon).
Whatever view the courts may take in future, only a candidate representing a registered political party will be able to use the party's name and emblem on the ballot paper. I hope that the right hon. Gentleman will accept that that will go a long way towards preventing confusion arising from the misuse of candidates' names. The courts set useful precedents in those two cases, and I hope that they would behave in a similarly reasonable manner in the future.
Amendment No. 2 would extend considerably the role of the Speaker's Committee, which is established by clause 10. It would give the committee some of the scrutiny functions which it might be more appropriate to consider for an electoral commission, were such a body to be established.
The idea of an electoral commission is not new. In 1993 the Labour party report of the working party on electoral systems, which was chaired by Lord Plant, recommended that an electoral commission should be established to oversee the entire electoral process. In my party's evidence to Lord Neill's Committee on Standards in Public Life in connection with its inquiry on party political funding, we proposed that an electoral commission should be established to oversee any controls to be imposed on party funding.
I hope that the right hon. Gentleman will accept that the Bill is not a suitable legislative vehicle through which to establish such a commission. It would be sensible to

await the outcome of Lord Neill's inquiry on party funding before we consider whether—and if so, how—such a body should or might be established. It would not be appropriate for the Speaker's Committee established under clause 10 to be charged with those additional scrutiny and oversight functions. I would worry slightly that Madam Speaker might be a little concerned if we were to go along that path at this stage in the proceedings.
On a point of detail, proposed subsection (1A)(b)(ii) in amendment No. 2 suggests that one of the roles of the committee should be to assist returning officers to exercise their judgment consistently, both over time and between different parts of the United Kingdom, when deciding under rule 6(A) whether a proposed candidate's description is misleading. I can confirm—this point was mentioned earlier—that we will be offering guidance to returning officers. We have already started discussions with representatives of returning officers and with Companies house on how that might be done.
In general terms, we expect that there will be a high degree of consistency in the decisions taken by returning officers and we all expect that there will be some misleading descriptions, the most obvious one being "Literal Democrat"—I see that the hon. Member for Torbay (Mr. Sanders), who was on the receiving end of that, is present—which no returning officer would accept once the Bill came into force. I believe that the problem will be resolved.
We must accept that it is possible that a returning officer in one part of the country may, because of local factors, regard as misleading a description that may be acceptable in another area. There are different traditions and different labels that have meaning in some parts of the country but not in others. Also, as time goes by, there may be changes in what would seem likely to confuse voters in associating a candidate with a registered political party. I hope that the reassurance I have sought to give to the House provides answers to some of the questions that have been asked.
The committee to be established under clause 10 will be made up of hon. and possibly right hon. Members, who will be appointed by the Speaker and who will advise the registrar on the more difficult or contentious applications to register a name or emblem of a political party using the wide political experience that they will be able to offer. In those circumstances, it would not be helpful or desirable to seek to extend the role of the committee, as proposed by the right hon. Member for Berwick-upon-Tweed, and I ask him not to press the amendment.
The hon. Member for Ryedale (Mr. Greenway) said that, as we go along and the new arrangements are implemented, a body of experience will build up. It is to be hoped that the arrangements will be robust enough to deal with that. Also, if there are any adjustments to be made along the way, we will have to consider them. I believe that we have taken everything reasonable into account and that we have the balance about right. I believe that any concerns will be covered by the arrangements. I hope that the House will accept that.

Mr. Beith: I seek to intervene because the Minister has not dealt with one of the points I raised which concerned the comments in Committee. Those comments seem to give some authoritative ruling on the use of words associated with a particular political party—identifying


"Tory" as a word to be protected but not identifying "Liberal" in the same way. I hope that the Minister will recognise that, just as he said, the returning officers and the registrar will have to work through these matters—we will have to see how the system develops—and that they should be able to do so free from any imputation that they have to regard the Minister's words in Committee as determining what they decide.

Mr. Howarth: I can give the right hon. Gentleman that assurance. I know that he has written to my right hon. Friend the Home Secretary about that issue in a letter dated 8 August—[Interruption.] I mean 8 July. Such is my desire to be on holiday, that I am jumping ahead of myself. The right hon. Gentleman will receive a reply to his letter after the Bill completes its later stages.
I think I made it clear in Committee that the Government have no desire to try to choke off a future application by the Liberal Democrats, and that such applications will be for the registrar to consider. However, I do not believe that the Bill is intended to prevent already existing parties from registering. I used the example "Tory" because, so far as I am aware, no party other than the Conservative party is known as or understood to be the Tory party. I thought that that would be a useful example.
The difficulty for the Liberal Democrats is that another existing party, although not represented in the House, is known as the Liberal party—as the Liberal Democrats were known originally. However, I do not intend to go into the labyrinthine developments over the years of the Liberal party, the Social Democratic party and the other variants of that name and party. Although I realise the Liberal Democrats' difficulty, I do not think that it is the job of this Bill or of the House to deal with it.
Potentially, the Labour party has the same difficulty, as a party that is usually associated with Mr. Arthur Scargill is called the Socialist Labour party. As I said on a previous occasion, that party fielded a candidate against me at the general election, although—I am pleased to say—it did not do very well. Nevertheless, "Labour" appears in its title. As I represent an entirely different set of politics to Mr. Arthur Scargill and his party—

Mr. Bob Russell: You used not to.

Mr. Howarth: I did, as I am sure Mr. Arthur Scargill would be the first to attest. Although I represent an entirely different set of politics to him and his party, I recognise their right to exist and to contest elections.
There are other contentious issues. I realise that the Liberal Democrats have genuine concerns that they will want to deal with, but the Bill is not the vehicle for doing that.
With those—I hope reasonable—assurances, I hope that the Liberal Democrats will feel that it is unnecessary to press their amendment.

Mr. Beith: I am glad to hear the Minister's recognition that it will be for the registrar and returning officers to deal with some of the difficult problems without being bound by his reflections—as interesting though they are—on them.
I was not convinced by the Minister's arguments on amendment No. 2—such as the argument that the Speaker's Committee would somehow be an inappropriate body to deal with these matters. He said that it is likely that the committee will be composed of hon. Members who are experienced in these matters, capable of giving a very useful steer to the registrar on difficult cases, and, therefore, presumably capable of reflecting on whether the whole system is working well or badly. Although the Minister chooses not to extend the mandate in that direction, I still think it would have been useful to do so.
I welcome the Minister's continuing interest in the concept of an electoral commission. I am sure that that issue will come up again after the new report, and that we shall be pursuing it. As amendment No. 2 is not the first amendment in the group, I do not have to make a decision on whether to withdraw it. However, we think that some of the issues that the amendment raises will have to be reviewed.
An electoral commission will not be established in time to deal with the issue in the first lot of elections that will be fought after the Bill is passed. Therefore, they will all be dealt with by the Home Office, as they always have been. I am not sure that that is an ideal solution.
I am disappointed that the Minister did not come up with some alternative to amendment No. 3, which deals with appeals. He said in Committee that he did not feel that there was an obvious alternative appellate body that could be brought into play. If one accepts his argument that the committee is somehow debarred from this role because it may have given the advice in the first place, we should look for an alternative body.
I do not think that one can ever dismiss the case for an appeals body on the grounds that everyone might appeal. If we adopted that argument, there would be no appeals mechanisms in any of the systems for which the Home Office is responsible. I know that the Minister's colleagues are rather weighed down by the appeals being made under immigration and asylum law. The Home Office is coming up with useful proposals to streamline the system, but that does not advance the principle that there can be no appeals system because too many people might use it. That is not the argument to advance.
Conscious of the fact that we have not yet hit on the ideal solution, and hoping that another place might look rather carefully at the matter, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 19

FALSE STATEMENTS: OFFENCE

Mr. Letwin: I beg to move amendment No. 4, in page 6, line 6, at end insert—
'(1 A) Without prejudice to the generality of subsection (1), it is an offence to attempt to secure the registration of a party which, irrespective of the party's proposed registered name, is substantially the same as a registered party, having regard to the applicant party's objectives, membership, officers or geographical base.'.
I am conscious of the fact that the Minister wants to start his holiday and that all hon. Members might wish to go to bed, so I shall not detain the House unduly,


even though the matter before us is one about which, as the Minister knows, I perhaps alone of the inhabitants of the United Kingdom feel extraordinarily strongly.
The Minister will want to know why we are troubling him with a different version of our attempt to solve the problem of split-ticket or alter ego parties. I shall tell him by answering three specific questions, which I imagine might have crossed his mind. First, is the issue important, if it is real? Secondly, is it real? Thirdly, would our solution be effective?
On the first point, I think that the Minister is of one mind with the official Opposition. He admitted, as clearly as the exchange in Committee would allow, that if there were a real threat of an alter ego party arising through split-ticket voting, and if the effect were to distort the electoral result, that would be important. Indeed, it would be more important than most of the abuses that the Bill otherwise seeks to prevent, because it would distort the essence of democratic choice. That choice should lead to the election of the party that the voters genuinely want to govern, not of some party that has been concocted, so to speak, as a result of political manipulation. We agree with the Minister that it would be an important abuse if it were real.
If I understood the Minister correctly at the time, and if I understand him correctly anew on reading Hansard, the brunt of his argument was that our proposal was a sledgehammer to crack a nut, because, although the problem would be important if it were real, it was not, in his view, real.
In Committee, I advanced the hypothesis that while the major political parties—the Liberal Democrat party, the official Opposition and the party that forms the Government—had made it clear in one way or another that they intended to eschew any attempt to use split-ticket voting, there might be an attempt to use split-ticket voting and the creation of an alter ego party on the part of nationalists in particular, and especially in the first elections for a devolved assembly or Parliament, in Wales and Scotland respectively.
I said then that I thought that it could be a tactic that a responsible nationalist party might employ once. Even if a party intended thereafter not to distort the democratic process, I thought then, and think now, that it might legitimately use such a tactic to achieve by lawful and constitutionally appropriate means what, were it less dedicated to democracy, it might have sought to achieve by other means—what a terrorist organisation, for example, might have sought to achieve by bombing or other means. People who believe passionately and sincerely in national identity are often driven to terrorism. It is much to the credit of the Scottish National party and Plaid Cymru that they have never been within a million miles of that attitude. They have always sought to act legitimately and through democratic processes.
Those parties, particularly the Scottish National party, have reached a point in the history of what they see as their nations at which there is a realistic possibility—fostered by the Government, much to the discomfort of all of us who are Unionists—of achieving in the next few months what they have laboured for over many years, often seemingly in vain: the establishment a Scottish National party Government in a Scottish Parliament, followed closely by a referendum and, if we are to believe current polls, independence. With that prize at

stake, there must be a great temptation for them to use the legitimate means of split-ticket voting and alter ego parties, which have been provided carefully for them by the Secretary of State for Scotland through the installation of an additional member system and not debarred by the Bill or—I shall come to this later—by amendments proposed in another place to the Scotland Bill.
Since the Committee stage, I have had the opportunity to inspect closely the utterances of the Scottish National party and Plaid Cymru and to make informal tentative inquiries about whether they would make parallel statements to those made by the major UK parties. The silence on those points has been deafening. I have not managed to trace the slightest record of them abjuring such a tactic. The informal contacts that I have had have made it clear to me that they have no intention of doing so.

Mr. Alasdair Morgan: Will the hon. Gentleman consider formalising his contacts with our party and Plaid Cymru? If he does, I am sure that he will get the assurance he seeks, that we have no intention of manipulating the democratic process, because we are confident that we can achieve our objectives by putting ourselves forward as Scottish National party candidates or Plaid Cymru candidates in any election and winning seats.

Mr. Letwin: That is an extremely comforting remark if it is the official position of the Scottish National party. If it is, a great part of the reason for the amendment falls. This is a surprising exchange. Is the hon. Gentleman willing to make a formal statement to that effect on behalf of the Scottish National party?

Mr. Morgan: I assure the hon. Gentleman that for many years Scottish National party members—I cannot speak for members of Plaid Cymru, although I am sure that they follow me on this—have stood as Scottish National party candidates. I cannot say the same for the Conservative or the Conservative and Unionist party, or the various other representations under which his party's candidates sometimes present themselves in Scotland.

Mr. Letwin: I should like to use this opportunity to crack this problem once and for all. It would be a great comfort to all Unionists. I regret that the hon. Gentleman, perhaps conscientiously, misunderstood my point. The question is whether the Scottish National party would contemplate using the device of, for example, a national party of Scotland as a separate party that would enter the proportional list, while entering its candidates under the Scottish National party title for the constituency section. This is a matter of the greatest importance, so I hope that the hon. Gentleman forgives me for being pedantic. Is he willing to make a formal statement on behalf of the Scottish National party that it will not engage in such a tactic?

Mr. Morgan: I thank the hon. Gentleman for giving way yet again. I find it surprising—perhaps, on reflection, it is not surprising—that the Conservative party is in so much need of coverage in Scotland that it has to accuse the Scottish National party alone of trying to use such a tactic. If it helps him, I assure him that all Scottish National party candidates will stand in the election as


Scottish National party candidates, and that the only party that it will put forward for list registration is the Scottish National party.

Mr. Letwin: The hon. Gentleman has said something extremely close to what I had hoped to hear. I hope that he meant that there will not be another party that had any relationship to the Scottish National party that would put forward candidates, not in the constituencies but only on the alternate list. I regret to ask him again whether he would be willing simply to say yes or no to that. Alas, he is not.

Mr. Adrian Sanders: Of all the countries in which such an electoral system operates, can the hon. Gentleman tell me of one in which alter ego parties have been used? From my research, there is not one.

Mr. Letwin: Contrary to what my hon. Friend the Member for Ryedale (Mr. Greenway) is whispering to me, that is quite true. Such a tactic has not so far been used. I do not think that it would be used in an ordinary democratic process outside the very particular issue of independence, which seems to be a one-off.
I have been very careful to say—I say this for the benefit of the hon. Member for Galloway and Upper Nithsdale (Mr. Morgan) as much as for anybody else's—that I do not remotely suggest that Plaid Cymru, the Scottish National party or any other party in this House or elsewhere in the United Kingdom would be inclined to use such a tactic recurrently. We are talking about a very special set of circumstances. The reason why I press the issue—I hope that I shall make the point abundantly clear to the hon. Gentleman—is that, if I were in his shoes, trying to act conscientiously, and given the very great importance that I would attach to the sincere goal that he has but which I do not share, I might seek to use such a tactic. The matter is of some importance.

Mr. Morgan: Why does the hon. Gentleman think that the SNP, which has always stood on a democratic platform, should alone among democratic parties seek to achieve its goal by some means that other parties would not use? What makes us so different—just a rating in opinion polls?

Mr. Letwin: On the contrary, it is not the rating in opinion polls. Indeed, as the rating in opinion polls to the discomfiture of the Secretary of State for Scotland rises, my fear diminishes. The need—so to speak—for such a tactic would diminish towards zero if and when the Scottish National party entirely eliminated the Scottish Labour party from Scottish politics. In the absence of the assurance that we have almost received from the hon. Gentleman, the SNP might seek to use such a tactic because of the very special circumstances to which this one occasion gives rise, fostered by the Secretary of State for Scotland.
If we receive an assurance from the hon. Member for Galloway and Upper Nithsdale, and it appears robust, and if, on inspection of Hansard, my noble Friends in another place believe that we have received such an assurance, that will much affect our attitude not only to amendment No. 4 but to amendments that have been and are to be

tabled in another place to the Scotland Bill and the Government of Wales Bill. I hope that the hon. Gentleman will take seriously a point that we believe—perhaps mistakenly—could have an impact on the constitutional development of the UK. It is not a light matter. I admit that it is pedantic, but sometimes at the interstices of the law lie constitutional developments. The official Opposition would have made a grave error if we had not taken that seriously.
My final point would have led me in any case to explain why we shall not insist on the amendment; it concerns the question of effectiveness. We thought it well worth while to bring this debate to the fore again, but on reflection we can see that, even in its tougher form, amendment No. 4 would not be sufficiently effective were such a tactic to be contemplated. That is because the penalty could be avoided by any party, simply by not registering itself. I apologise to the Minister if I have missed something, but I do not think that there is much else by way of disincentive, apart from the fact that such a party could not then have party political broadcasts. That, of course, would be no penalty at all if the alter ego party were really an alter ego. It would not be its intention to have separate party political broadcasts in any event.
Regrettably, we do not think that the amendment could be used as an effective vehicle for stopping the problem. The Minister has agreed that the problem would be important if it were real, but he says that it is not a real problem. We have also had what may or may not be a complete assurance from the Scottish national party—if it is a complete assurance, I greatly welcome it—that it will not use such a tactic and that the threat is not real.
If the threat were real, my amendment, which I think is the toughest that could be inserted into the Bill, might not, alas, be tough enough. It therefore has the status of a probing amendment. If we do not believe that the assurances are sufficiently robust, my noble Friends will seek in another place to introduce robust amendments to the Scottish and Welsh Bills that would have the requisite effect.

11 pm

Mr. Beith: Can anyone, Mr. Deputy Speaker, intrude into this interesting exchange between the Conservative party—or the Unionist party, as I prefer to call it on this occasion—and the Scottish National party? Indeed, in my constituency the offices of the Conservative party are labelled the "Berwick-upon-Tweed Division Unionist Association"—a fact that I have had to draw to Conservatives' attention when they tease us about party names.
The fact that there is a problem was first brought out not by the Scottish National party but by a member of the Labour party, the hon. Member for Glasgow, Pollok (Mr. Davidson), who was the chairman of the Co-operative group of Members of Parliament. He advanced the thesis positively, saying that it would be to the advantage of the Labour and Co-operative party if it fought under the two separate labels, one in the constituencies and one on the list.
The hon. Gentleman was quoted in The Scotsman of 2 February as saying:
Because it is such a new idea some of those who regard themselves as modernisers, open to new ideas might not want to take it on board. It is so radical and requires such a change in thinking".


We have moved on since then, especially in the context of the Government of Wales Bill. Indeed, we have moved on in various respects—although the hon. Member for Pollok has not moved on as he was hoping to move on in the Scottish context, in that he has not been selected to stand.
In the debate on the Government of Wales Bill, the Welsh Office Minister made it clear in the House that the Labour party would not engage in that tactic, with or without the help of its Co-operative wing. The Conservative party, too, has made such a statement, and my hon. Friend the Member for Brecon and Radnorshire (Mr. Livsey) has done the same on behalf of our party.
I regard the statement made today by the hon. Member for Galloway and Upper Nithsdale (Mr. Morgan) on behalf of the Scottish National party as of equivalent significance and value. I do not impute any doubt or ambiguity to the words that he used, and I am sure that his party would not want to resile from what he has said today. People would think very badly of it were it to do so, but I do not suspect it of any such intention. The fact that the hon. Gentleman intervened in that way was helpful, and has completed the picture as regards the main parties.
However, there are still a few other people who might try to exploit the possibility, although they might not be in such a good position to do so. It is therefore still reasonable to consider whether there may be appropriate amendments to deal with the problem. The debates on the subject have at least served a useful purpose, in getting all the parties to make it clear that that is not a proper tactic to use in an additional member electoral system, and that they will not use it.

Mr. Jim Fitzpatrick: I do not wish to detain the House, but I must refer briefly to activities in my constituency in east London, especially as the Conservative Front-Bench spokesman, the hon. Member for West Dorset (Mr. Letwin), appears to be adopting the moral high ground and saying that his party is not guilty of any transgression.
At the 1994 local government elections, the local Conservatives in what was then the Newham, South constituency traded under the title "Conservatives Against Labour's Ethnic Policies". When that was challenged and complaints were made, Conservative central office said that local associations were autonomous. In those days that was right, but times have now changed.
In 1998 the Conservatives issued literature that has been deemed by the Commission for Racial Equality to be offensive and to contravene guidelines on decency and dignity signed by all the major political parties.
In the current by-election in the Custom House and Silvertown ward, one candidate is standing under the title "Real Labour". The significance of that is that four of the individuals who have nominated that candidate nominated Conservative candidates for the borough elections only two months ago. It does not overly stretch the imagination to think that something is untoward in the Poplar and Canning Town constituency Conservative association. I have written to the Leader of the Opposition on three occasions drawing those facts to his attention, but I have yet to receive a response. I hope that the Bill will prevent such occurrences from happening again.

Mr. Robert Syms: I support the amendment and my hon. Friend the Member for West Dorset (Mr. Letwin). These are important matters that cause great concern in Dorset.
My hon. Friend was right to say that it is unlikely that any responsible party represented in the House would adopt the suggested tactics, but that does not mean that it will never happen. The Bill gives us an opportunity to close a loophole that somebody, some day, may exploit. As we heard from the right hon. Member for Berwick-upon-Tweed (Mr. Beith), when Jim Callaghan introduced descriptions of political candidates, he assured the House that it would not be abused, but it has been. One of the good things about the Bill is that it closes that loophole, which at some stage has affected all parties. I am sure that some of the practices outlined by the hon. Member for Poplar and Canning Town (Mr. Fitzpatrick) would be outlawed under the Bill.
There is a real problem, because under the additional member system there is both first past the post and the list. The logic of the system is that the list should balance and give a degree of proportionality to the choice. Any attempt to distort the proportionality within AMS would undermine it. My hon. Friend the Member for West Dorset was right to say that there needs to be only one distorted election and everyone will be outraged and the law will no doubt be changed, but a lot of damage could be done on that one occasion.
The key point is that the system depends on the predictability of the first-past-the-post element in AMS. People can try to distort the list side only when they take a view about the number of first-past-the-post seats they will win. Scotland and Wales have been mentioned because parliamentary constituency boundaries are being used. It is therefore possible, in advance of all elections, to take a reasonable bet—given opinion polls—about who is likely to win, for example, the 73 first-past-the-post seats in Scotland. When one takes a view on that, one can decide whether to try to distort the proportionality in the list.
A party that believes that it may take a majority of the first-past-the-post seats, but will have little dividend from proportionality in the list, may be tempted to have an alter ego party to try to give it a few extra seats. Given that AMS is less likely to lead to one party having an overall majority, there is a great temptation for a party that thinks it may affect a few seats one way or the other to try to distort the list.
A party that is dismal and deadly and does not win any first-past-the-post seats—which, in the context of the last general election, may well be my party—will rely on the list to reward it, as that is the logic of the system. There may be a temptation to distort that by reducing the chances of that party getting its fair degree of proportionality within the system.
That does not happen in the federal elections in Germany, but there are occasions with lander elections when a party takes a view about first-past-the-post seats and state parties—which are often groups of Christian Democrat business men who make it perfectly clear which party they would support—try to take more than 5 per cent. of the vote so that they get some representation in Hamburg or Lower Saxony.
We are raising an important issue for debate. The point of registration of political parties is to try to clear up politics. That is necessary simply because we have introduced AMS. My hon. Friends have tried to point out that it is possible to try to skewer the result on a list one way or the other by an alter ego party.
In debates on devolution, my right hon. Friend the Member for Devizes (Mr. Ancram) has mentioned that one or two academic journals north of the border have started to publish articles about the new system and how it can be affected. People do not yet understand the full implications of the system. The Scottish newspapers and System 3 often get how the seats would be allocated quite wrong because they do not quite understand how the system works. In quaint academic circles, people are starting to look at how the system can be skewered.
All we are suggesting is that this matter deserves consideration. It has to happen only once, and to skewer two or three seats one way or the other, to affect the control of an assembly or a parliament, which could have a material impact on the body politic. We do not know what the Jenkins commission will come up with. I and many of my hon. Friends—indeed, colleagues on both sides of the House—will be campaigning strongly against whatever the Jenkins commission comes up with when the referendum comes along. However, the reality is that AMS is a strong possibility, as is some system with a list and some degree of first past the post. Even if that does not become a temptation in Scotland and Wales, it may start to become one for Westminster.
We raise the issues because there are real concerns that there may be some distortion. How much distortion depends on the predictability of the result under first past the post. If all the boundaries have been redrawn, we have to some extent thrown all the cards into the air, but we can predict which way a good many of the seats in Scotland and Wales will go, and that will have an impact on the proportional element in the system.
I make those points in support of my hon. Friend the Member for West Dorset. I am sorry that I missed some of the Committee stage. I was on Select Committee business, and I am devastated that I have not taken part in the debates.

Mr. George Howarth: I feel privileged to have witnessed this debate tonight. I do not wish to cause strife between us, but the hon. Member for West Dorset (Mr. Letwin) put forward one of the most elegant arguments I have ever witnessed in the House. In a fifteen-minute speech, he managed to convince himself that he was wrong. However, the hon. Member for Poole (Mr. Syms) was not convinced by his argument.
The debate was interesting, not least because the hon. Member for Galloway and Upper Nithsdale (Mr. Morgan) managed to reassure the hon. Member for West Dorset. The hon. Member for West Dorset indicates that he is moving in that direction, at least, and the problem that he described in great detail—which was elaborated on by the hon. Member for Poole—is most unlikely. The only pity is that, to complete the pacification of the hon. Member for West Dorset, there was not a representative of Plaid Cymru here. If there had been, we could all have gone home 20 minutes ago. I accept that the hon. Gentleman

does not intend to move the matter further at this stage, and he has reserved the right to return to it in different contexts on different occasions.
I ought to refer briefly to some of the speeches. The right hon. Member for Berwick-upon-Tweed (Mr. Beith) referred to my hon. Friend the Member for Glasgow, Pollok (Mr. Davidson). I have known my hon. Friend for many years—for longer than I care to remember. We were both involved in the youth movement—that gives a fair indication of just how long ago it was—of our party. For the purposes of the argument, it is sufficient to say that, when I first met my hon. Friend, he was a student politician and I was a member of the then young socialists of the Labour party. We used to meet at conferences. My hon. Friend drove around with a group of colleagues in a minibus on the front of which was strapped an icepick, which was rather an indication of his attitude towards the supporters of Leon Trotsky. My hon. Friend continues to hold fairly robust views, which the right hon. Member for Berwick-upon-Tweed managed to evoke tonight.
11.15 pm
The Bill seeks to address the situation described by hon. Friend the Member for Poplar and Canning Town (Mr. Fitzpatrick) in his constituency in local government elections. I envisage that it will deal with that problem. In the local government elections in May, candidates in my constituency described themselves variously as real Labour and new Labour. Previously, they have described themselves as Labour and, in the literature, "(Ind)" is added in small print to show that they are somehow independent of the Labour party. On one occasion, a candidate, who was subsequently arrested, stood as a Labour Green Liberal candidate—presumably on the basis that one can have a peripatetic approach to political ideology. Once, she succeeded in getting elected but, unfortunately, her appearance in court prevented her from standing subsequently.
I use those examples merely to illustrate that there are problems in the system, but as the hon. Member for West Dorset has managed to reassure himself, there is little that I need to add on the subject.

Mr. Letwin: I am impressed by the Minister's discovering a title for new Labour that has so much more resonance. Labour Green Liberal seems to summon up almost every aspect of the current Government. I am minded to refer the matter to my right hon. Friend the Leader of Her Majesty's Opposition for immediate retail.
I must admit that I had not expected the debate, late as it is, to be very much use. Charming though the Minister was throughout the Committee stage, he showed no sign of weakening in the face of argument, and I had not expected any willingness on his part to accept the amendment.
However, I was unaware that a formidable representative of the Scottish National party would be present. Still less did I imagine that he would make utterances that may or may not quite constitute the assurances that we sought, but which are certainly helpful. If the debate has produced that result it may have affected the course, in a very slight way, of British history, and for that I am duly grateful to the hon. Gentleman, who has certainly contributed more to the enlightenment of the House than I managed to do in the considerable discussion of the Bill in Committee.
I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Order for Third Reading read.

Mr. George Howarth: I beg to move, That the Bill be now read the Third time.
I thank Conservative and Liberal Democrat Members for the positive and constructive way in which they contributed to our proceedings tonight and in Committee. On Second Reading, the right hon. Member for Sutton Coldfield (Sir N. Fowler) made it clear that the Conservative party would support the Bill in principle, while reserving his position on the details for scrutiny in Committee, and his party kept to that. A similar assurance was given by the Liberal Democrats and I can confirm that they have behaved impeccably ever since. I should add the Scottish National party to that paean of praise at this hour of the night.
The Bill was amended in Committee, which will ensure that it is an improved Bill as it leaves the House. In Committee and on Report, I had opportunities to describe how the scheme is intended to operate. I hope that, in doing so, I have been able to throw some light on the workings of the new system and to reassure right hon. and hon. Members about any concerns that they may have had.
As I said earlier, the Bill does not prevent parties from using similar words in their names, provided that that does not cause voters to be confused with an existing registered political party. In addition, existing political parties with similar names, for which there is a clear historical precedent, will be able to register in the initial stages. I do not wish to get drawn into the Liberal Democrat-Liberal party debate again, because we have discussed that too many times.
The practical arrangements for implementing the registration scheme will be the key to its success. I am pleased to say that Home Office officials will hold a meeting tomorrow with representatives, returning officers and officials from Companies house. They will consider the arrangements to be put in place to ensure that returning officers have up-to-date information on the names and emblems of registered political parties prior to an election. They will also discuss what guidance will be needed to help returning officers decide whether a candidate's description is appropriate.
The new rules are likely to lead voters to associate candidates with a registered political party, so hon. Members need not be too concerned. In some respects, the Bill is a technical measure, but it will have a positive and profound effect on an important part of the electoral process. It will provide, for the first time, a register of political parties. That is an essential requirement for the new-style additional member system of elections to the Scottish Parliament and to the National Assembly for Wales, and for the regional system of elections to the European Parliament.
The Bill will protect the names of registered political parties from misleading descriptions of candidates on ballot papers. At the same time—this is the most important point of all—it will protect the electorate from some of the sharp practices that have begun to creep into our electoral process. That is a worthy purpose.
Personal reservations have been expressed from time to time, but a key feature of the Bill is the fact that ballot papers will, for the first time, be able to show the party emblem next to the name of each candidate representing a registered party. The hon. Member for Ryedale (Mr. Greenway) is a bit of a traditionalist in these matters, but those with poor sight, or the partially sighted, will benefit from that new development. By using its logo or emblem, each political party will have an additional means of identifying its uniqueness. In that sense, it is a positive development for the electorate.
The Bill will safeguard, modernise and improve the democratic process. It will be the better for the fact that it has support on both sides of the House.

Mr. Greenway: I am grateful to the Minister for his remarks. We have tried to be constructive with the Bill, but he knows that we do not welcome it with a great deal of enthusiasm.
The Bill is necessary, first, because of how the Government have legislated for changes in the elections to the European Parliament and, secondly, as the Minister just said, because of the electoral arrangements for the assembly in Wales and the Scottish Parliament. However, had the first-past-the-post system been used for elections to those bodies, registration would not have been required.
The hon. Member for Poplar and Canning Town (Mr. Fitzpatrick) raised another important issue: the use of misleading descriptions, impersonation and candidates seeking to deceive voters. We are not convinced that such a formal structure was needed to deal with those abuses, and in any event it would have been better to reach a formal consensus on how to proceed. It was all too rushed for that.
As it stands, the Bill is clearly not considered to be the complete answer and a great deal of discretion will remain in the hands of returning officers. Only time will tell whether the Bill is entirely adequate and satisfactory in respect of its main objective. We may have dealt with the substance of it in two Standing Committee sittings, but brevity and concise argument, which the Minister and I developed during proceedings on the Data Protection Bill and which have stood us in such good stead for this Bill, should not be taken as a ringing endorsement of, or entire agreement with, every measure. Without question, we are embarking into uncharted waters in our democratic processes. The Bill applies to all elections, which means that it will extend to local government. On balance, we agree with that, but dealing with it will be a major headache for political parties and returning officers.
The issue of names came up again tonight. The Bill allows for the registration of only one name, so I think that we shall not be allowed to register the name "Tory". It will be left to registrars to use their powers to avoid confusion and to prevent someone else from registering that word, but loopholes were identified in Committee. The hon. Member for Colchester (Mr. Russell) made that point tellingly, but it has not been addressed.
Issues in respect of the Liberal Democrat party and the possible registration of the words "Liberal party" have been mentioned tonight, and I should not like to be the registrar who had to make a judgment on that; it is a minefield that will have to be picked through, and no hon. Member can be sure what the eventual outcome will be.


The Secretary of State will have powers to prohibit the use of certain words, but we are still in the dark about what those words will be, and the process will be secret, not open, because applications will not be advertised.
We have had a lengthy debate about sham parties, although that issue arises because of other electoral arrangements, not the Bill. All our debates have been valuable because they have shown the extent to which it has been necessary to tease those matters out. That is not to the credit of the Bill, which remains deficient.
In respect of appeals, an important role will be placed in the hands of the Speaker's Committee. The procedure is untried and untested, yet huge responsibility will rest on its members and on the registrar, and the outcome of elections may depend on its decisions. Guidance will be given to returning officers, who are the Aunt Sallies in all this. They will be responsible for making the Bill work, and a great deal will depend on their interpretation of the legislation and on the guidance promised by the Minister. I know that, in the spirit of openness, he will consult us. We must hope that returning officers will find the arrangements satisfactory.
The Bill tries to kill two birds with one stone: the concept of registered parties in proportional representation and alternative member elections, and dealing with impersonation, an abuse that has become a growing problem in elections to the House and to other bodies. A general election will not provide the first test, however. We suspect that experience of the arrangements in the Bill gained in other elections will require us to revisit some of those issues before the first general election under the registered party system. We hope that we shall be able to do so with rather less haste.

Mr. Beith: I am tempted to say to the hon. Member for Ryedale (Mr. Greenway), "Cheer up, you might win a seat or two under the proportional system that will be used in Scotland and Wales, and the Conservative party would not otherwise do so."

Mr. Letwin: Will the right hon. Gentleman give way?

Mr. Beith: So early in my remarks.

Mr. Letwin: I apologise to the right hon. Gentleman, but does he accept that it is a signal mark of the principle on which Conservative Members are acting in those matters that that does not inhibit us from our objections to the proposals?

Mr. Beith: I was not suggesting that the hon. Gentleman should be inhibited, but I thought that the idea that co-operation between two other parties was producing a system under which Conservative voters might be represented in the Scottish Parliament in proportion to their numbers might introduce a note of cheerfulness—although, of course, they oppose it in principle.
We welcome the Bill, because it is a small but necessary part of the package of constitutional reforms on which we and the Labour party agreed before the general election, and put before the voters in our respective manifestos. It will enable the first national proportional representation elections in the country to take place: the European elections in June next year, and the proportional representation elections in Scotland and Wales. It will have another valuable effect: it will prevent some, although perhaps not all, confusion at elections as a result of deliberate attempts to mislead the electors. I am thinking particularly of the "Literal Democrat" problem experienced by my hon. Friend the Member for Torbay (Mr. Sanders).
The provision that allows party emblems to be shown on the ballot paper will help to avoid confusion from "spoiler" candidates, and will help voters with reading difficulties that embarrass them. Some people are reluctant to vote, and do not tell us why.
The Bill has another interesting feature. It is a constitutional Bill—it is about elections—but it was considered not on the Floor of the House, but in a Standing Committee. The result was good, detailed scrutiny. There is a lesson to be learnt from that. Consideration of the Scottish and Welsh Bills on the Floor of the House meant that large parts of the legislation were not debated properly. We believe that the answer lies in our debating parts of the more substantial constitutional Bills on the Floor of the House, and parts in Standing Committee. Our experience with this Bill has certainly shown that detailed scrutiny of a constitutional Bill is possible in Committee. Constitutional Bills require detailed scrutiny, just as much as—in some cases, more than—some other Bills. Their provisions can be very intricate.
My hon. Friend the Member for Colchester (Mr. Russell) played a notable part in the Bill's consideration in Committee. I was grateful for that: it was my hon. Friend's first experience in a Standing Committee and his first opportunity to lead for us on a Bill, and he discharged his responsibility very well. My hon. Friend the Member for Torbay brought to the Committee his personal experience, as well as his usual skills. I think everyone will agree that the work of the Committee was useful, satisfactory and productive, although short.
I believe that the Bill has been improved, but my suggestion to the Minister that we need some kind of electoral commission is an expression of my feeling that we must return to these matters regularly. We are evolving new systems, and we are trying to modernise our electoral system in many regards. The Minister chairs a Committee that considers many of the more detailed aspects of modernising electoral systems. It would be much better if we had a more detached, more independent body to handle some of the difficult decisions that arise; but the Bill has made a useful contribution to our democracy

Bill read the Third time, and passed.

Viagra

Motion made, and Question proposed, That this House do now adjourn.—[Janet Anderson.]

Dr. Evan Harris: I am pleased to be able to introduce a debate on the prescribing of Viagra, although not because I think that people need any information about what it does or why there has been concern about it. I should stress at the outset that this is a serious debate about a serious problem—the potential costs of a treatment for a significant condition.
Prescription of Viagra is a recognised drug treatment for male impotence, or male erectile dysfunction; but Viagra is a new drug, which causes concern about cost. At its recent conference, the British Medical Association passed a motion based on its worries about the introduction of the drug—
That this Meeting demands that the Government urgently reviews the mechanism for the introduction into clinical practice of newly licensed expensive drugs".
There is clearly concern about the cost, but that applies to other drugs as well.
The debate has attracted a degree of media attention. I suspect that we would not be able to get that attention if we discussed the prescribing of beta interferon, cholesterol-lowering statins or Taxol for ovarian cancer; however, the principles in regard to those drugs—as far as they go—are the same as those applying to Viagra.
However, four factors that are special to Viagra give us cause for greater interest. First, this drug has been well publicised, so, if and when it is introduced into the NHS, it will not be possible to do so quietly and without patients or those who feel they could benefit from it knowing about it. Secondly, there is potential for demand to be for a quasi-recreational use of the drug.
The third special factor is that some—perhaps the majority—of the people who feel that they could benefit from the drug are not already being treated by the NHS for the condition, as may be the case with the other drugs I mentioned. The fourth thing that is special about Viagra compared with the other drugs that cause concern because of the cost of introduction is that there are no immediately obvious down-the-line savings through the prevention of either in-patient admission or a worsening in health that would require more expensive treatment. There is also little in the way of savings from replacing existing treatment by this new drug.
Viagra is, in those senses, special, but I wanted to raise this issue because it allows us to discuss a specific example of NHS rationing probably for the first time. I should like to explore a number of false arguments about Viagra. I hope and expect that the Government will not disagree with me.
The first argument is that Viagra, if available on prescription from a GP, will blow a £1 billion hole in the NHS budget. That is certainly a fear, but although there will be an effect on drug cost pressures, a cost of £1 billion is unlikely, and it is not the figure that anyone I have spoken to who has thought about potential demand would put on it. Even if one in 10 men have a problem with erectile dysfunction, only a proportion would benefit from this treatment, and only a proportion of them would

come forward for treatment. Some men are already being treated, so there would be a small cost saving if they switched to Viagra.
The second argument—it is almost a knee-jerk reaction—is that there are good reasons why Viagra should not in fact be available on the NHS. People are persuaded otherwise, however, when they realise that male erectile dysfunction is a recognised medical condition that is already treated on the NHS by injection or by implant. Many patients suffer significant psychological or even psychiatric problems, and there are strong causal associations with alcoholism, suicide and marriage breakdown.
Some of the effects and associations that I have just mentioned have significant treatment and social costs. I hope that the Minister will agree that, in a philosophical sense, most definitions of health include reference to adequate function of all organs of the body, without discrimination, and the ability to perform most functions, without discrimination, that people and professional doctors would consider to be normal.
The third argument is that there are good clinical and cost reasons for prescribing this drug only through hospital consultants. Many people think that the Government are seriously considering that. It is right to give the matter serious consideration, but there are no strong arguments for doing so. Although some patients suffering from impotence see urologists, GPs are more than capable of treating male erectile dysfunction with existing treatments, and are also capable of establishing who needs the treatment as opposed to who demands it.
Unlike powerful cardioactive drugs, Viagra does not have a particularly complex pharmacology with particularly complex interactions. It does not have a difficult or unusual mode of delivery, unlike beta interferon by injection. It does not have difficult outcome measures, or difficult-to-measure outcome measures. Altogether, it seems suitable for primary care prescribing. It would be ludicrous to clog up hospitals with such patients in view of the high work load of urologists and the shortage of urologists to carry it out, including important waiting list procedures.
The cost of a hospital appointment is higher than a general practitioner consultation, and in some specialties secondary referral automatically brings expensive investigations. The only point of consultant-only prescription might be to reduce take-up for financial reasons, but that would be a distortion of the clinical gate-keeping role of primary care. Other hospital-only drugs are generally much more expensive per dose. They include beta interferon and are for patients, such as those with multiple sclerosis, who are already under the care of a consultant. Such patients would be expected to be under the care of, known to, or in touch with, a hospital neurologist.
There is thus a powerful case for treating Viagra, if and when it is licensed, in the same way as any other relatively safe or assumed-to-be-safe and effective oral medication for a recognised medical conditions. That would make it prescribable on the NHS in general practice. A decision not to do that would require the Government to justify the decision.
Nevertheless, a decision to allow GP prescribing of Viagra would have significant cost effects for some of the reasons that I have given, and there is also the cost


of the treatment itself. In addition, the cost effects will be even more apparent to professionals in the service, which is why the GP committee of the British Medical Association is particularly worried now that drug budgets for GPs are to be cash limited at practice or primary care group level. There is a thus a likelihood that the new treatment will make rationing decisions in the NHS more likely, more obvious to professionals and to patients and the public generally.
I call upon the Government to come clean about the word "rationing". It inevitably exists in the NHS because of a mismatch between resources and demand. I do not place any particular value on rationing: I use it to describe the mismatch. For example, long waits for elective treatment are a form of rationing. Curative treatment is delayed, and that means that some people will never have it because they may die or become inoperable. Treatments such as in vitro fertilisation, beta interferon for the treatment of multiple sclerosis, cholesterol lowering statin drugs to prevent heart disease, and taxol for ovarian cancer are available only on the NHS in some areas under what has been called post-code rationing.
Alternatively, they are cash-limited on a first-come, first-served basis. That means that known specific treatments may not be available, although in a population sense they were shown to be effective, and that is a form of deprivation of treatment. An even better example is the fact that NHS dentistry has effectively been rationed because it has been privatised away.

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I appreciate that this is the hon. Gentleman's Adjournment debate, but its title is "Prescribing Viagra", and he must relate his speech much more specifically to that. He is getting into the realms of NHS dentistry and rationing in general.

Dr. Harris: Thank you for your guidance, Mr. Deputy Speaker. I was merely seeking, as I hope the Minister and you will understand, to show that Viagra causes problems in terms of rationing.
On the issue of prescribing Viagra, the Government will be forced to be explicit and to start a public debate. People will not understand that a treatment is not available on the NHS. It will mean that patients who cannot afford private treatment will not be able to obtain effective treatment for male erectile dysfunction, which is a recognised medical problem. That would be a return to pre-NHS days when the poor could not get the same treatment as other people.
Until recently, all Governments have refused to accept that for drugs such as Viagra rationing exists. As such drugs, of which Viagra is the best example, come on stream, people will ask for them and will expect a reason for their non-availability in their postcode area. Already the Minister has accepted, in answer to a Liberal Democrat question at oral questions, that there is a postcode lottery of some treatments. That is to be welcomed, as we need a public debate on the matter.
If the public who may need Viagra or other treatments are to make informed decisions about the resources that they want allocated to the NHS to allow those treatments to be prescribed, they must be told what they will get

from the NHS in return for the taxes that they pay. I would argue, and I believe that this was the fear of the BMA when it debated Viagra, that the amount of resources in the NHS—6.9 per cent. of gross national product—will not be sufficient to pay the full costs of prescribing such drugs, without something else having to give.
I hope that the Government will not—as they have done with other treatments, perhaps by default rather than by design—pass on the responsibility for denying patients on cost grounds treatments such as Viagra to doctors, nurses or even managers; just as doctors who do not prescribe a drug because it is clinically unnecessary would not seek to blame that clinical decision on the Government. The problems relating to the prescribing of Viagra give the Government an opportunity to set out to the public that what they get is what they pay for, and to make rationing on cost grounds much more explicit, for this drug and other treatments.
The minimum that I ask the Minister to do is to start a public debate on rationing, so that the public can recognise that what they put into the NHS is what they get out. The Liberal Democrats have for that reason proposed a standing conference to remove the party political element from debates about the prescribing of expensive new drugs. I hope that the Minister will take that into consideration in his response.

The Minister of State, Department of Health (Mr. Alan Milburn): I congratulate the hon. Member for Oxford, West and Abingdon (Dr. Harris) on securing this important debate. The subject that he has chosen, Viagra, has produced more comment than any other new drug in living memory, and probably more bad jokes as well. It is already a cause celebre and, as he rightly says, it raises some important issues, not least because Viagra has prompted a huge debate about its potential impact on the national health service. I shall take this opportunity to set out the Government's position on Viagra and, more generally, on the issues that it brings in its wake.
May I make one thing clear from the outset? The NHS is a national health service, not a national happiness service, to borrow a phrase from a recent article in The Sunday Telegraph. If Viagra is to be available on prescription, it will be so as a potentially serious drug addressing a genuine clinical condition for some patients. That is the context in which I propose to address the issues this evening.
I should also make it clear that the debate is in danger of running ahead of actual developments. Viagra has not even yet been licensed for use in the United Kingdom, or indeed anywhere else in Europe. At present, it is an unlicensed medicinal product in the UK. Apart from its being prescribed on a named-patient basis by a doctor, any form of retail sale or supply of Viagra is a criminal offence under the Medicines Act 1968. The Medicines Control Agency is currently investigating illegal trading and advertising activities, and will take action against traders. The MCA has also advised patients against buying Viagra through mail order, or through the internet, on health grounds.
It is true that the manufacturer of Viagra has applied to the European Medicines Evaluation Agency for a European marketing authorisation, which, if granted, would be binding on the United Kingdom. The agency


refers such applications to an expert committee that is responsible for the evaluation of medicines for human use—the Committee for Proprietary Medicinal Products. I understand that Viagra has now received a favourable opinion from that committee. The final decision on whether to grant marketing authorisation will now be taken by the European Commission after consultation with the competent authorities of the member states. The timetable for that decision is approximately one to three months.
If licensed, Viagra would, in the first instance, be available only on a doctor's prescription. It is possible that, after a period of further experience—assuming that reveals no unexpected safety problems—it could then be deregulated and made available for sale over the counter. That is not an immediate option, and would need to be subject to the most stringent safety tests, particularly bearing in mind the reports we have had from America on a number of people who have died as a result of taking Viagra.
Naturally, we have been giving serious thought to how Viagra should best be introduced into the NHS, if and when it becomes licensed for use. We have been analysing the potential number of patients and the potential costs, and we have commissioned an appraisal of the strength of evidence for clinical and cost-effectiveness.
We have also invited the Standing Medical Advisory Committee to develop guidance for the NHS on the appropriate use of Viagra. The committee, which includes the presidents of the medical royal colleges, is well placed to give such advice, and has, for instance, recently issued guidance on the use of lipid-lowering drugs.
In all this, three things need to be kept in mind. First, it is vital that any prescribing should be closely targeted on patients with genuine clinical need. As the hon. Member for Oxford, West and Abingdon was hinting, Viagra is unusual, if not unique, in the scope for patients who are seeking it to use it as a recreational drug rather than for real health need. I am determined to ensure that NHS resources are not frittered away in that fashion.
Secondly, erectile dysfunction has a variety of clinical causes, and treatment is not just a question of taking a pill. It must involve a full and expert assessment and consideration of alternative or complementary forms of treatment. Indeed, the NHS currently provides a range of treatment for men with erectile dysfunction, and it is important that the introduction of Viagra—if and when that happens—does not lead to the presumption that it is a miracle cure for all impotence problems
Thirdly, the NHS—even after today's historic increase in NHS funding—does not have infinite resources, and we must ensure that funding is devoted to health needs of the greatest priority. For some patients, there is no doubt that impotence is a serious and devastating condition. However, in making our decisions on how we offer NHS treatment to them, we need to keep in mind that it is not a life-threatening condition. Many might therefore conclude that, overall, it should have a relatively modest priority for NHS funding.
Weighing up all those factors—the evidence on clinical and cost effectiveness and the needs of individual patients while keeping a reasonable view on priorities—is a complex affair, involving a range of competing judgments. At the moment, decisions on how new treatments are introduced into the NHS, whether they be

drugs, interventions or new devices, are taken more or less on an ad hoc basis, usually at local rather than national level.
The result is twofold. First, we have the worst of all possible worlds with some proven treatments being introduced too slowly into the NHS and others, that are unproven—either on clinical or cost grounds—being introduced too quickly. Secondly, local decision-making about access to treatments can be extremely variable. The result is what many describe as a lottery in care, with unacceptable variations in access within what is supposed to be a national health service.
That is why the Government have decided to set up the National Institute for Clinical Excellence, to produce clear, authoritative guidance to the NHS on which treatments work best for which patients and which do not. The result will be greater national consistency, based on better informed clinical judgments.
The national institute will bring together the work currently scattered over many disparate bodies to benefit patients in two ways. First, treatments with good evidence of clinical and cost-effectiveness will be actively promoted, so that patients will have faster access to treatments that are known to work. Secondly, and conversely, treatments that are supported by inadequate evidence will not be widely disseminated unless further research shows that, on balance, they are an effective use of resources.
For a drug such as Viagra, the national institute would need also to advise on how such treatments should best be targeted to ensure that the most appropriate patients are selected for treatment, and that NHS resources overall are used in the most effective possible way.
Decisions on Viagra, however, will not be able to wait for establishment of the National Institute of Clinical Excellence. As I said, the Standing Medical Advisory Committee has been asked to develop guidance for the NHS on the role of Viagra. Clear guidance, properly monitored, will ensure that the availability of Viagra on the NHS is consistent across the whole country—should it be licensed.
I should expect guidance to emphasise the need for a full and expert clinical assessment before patients are prescribed Viagra, especially when there is no previous history of related disease or diagnosis of impotence. I should expect also that such assessments will take place under the auspices of expert hospital clinicians rather than through family doctors. Clearly the implications for specialist hospital services will have to be properly assessed before final decisions are taken, but I think that it is right to make it clear now that the Government do not want GPs to be burdened with the weight of expectations that have been built up around the drug.

Dr. Harris: I should be grateful if the Minister will return to an earlier point, and explain how, if the drug is licensed and available, general practitioners—regardless of whether their decisions are checked by a hospital consultant—should deal with the problem of having to tell some patients that the drug budget is insufficient to provide them with the treatment that they need. Such a problem currently exists, and it may well be exacerbated.


Does he not believe, as I asked him earlier, that the Government have a duty to be explicit about those matters?

Mr. Milburn: The hon. Gentleman could have made a good point, but he has made a bad one—as he did in his speech, when he said that drug budgets would be cash-limited. As we have repeatedly made it clear—he should understand this point; to be fair to him, he understands health issues—no part of the new unified budgets being made available to primary care groups is to be artificially capped. Indeed, we are removing the cap.
It will be for GPs, community nurses and others to decide how best to use available resources as a totality for the benefit of the individual patient. GPs have not previously had that ability, and they will welcome it. It will be a boon. It may well lead to increased GP expenditure on drugs, or on hospital referrals or other investigations. It will be for general practitioners to make those choices. It is simply wrong to suggest that GPs will be placed in the position of having to turn away patients because of an artificially capped drugs budget. The hon. Gentleman knows that that is wrong.

Dr. Harris: I am grateful to the Minister for that clarification. The point that I was attempting to make—I shall try to make it differently this time—was that health authorities are already faced with prioritisation, or deprioritisation, issues relating to expensive drugs. They have to decide which drug treatments they can or cannot support.
Under the new system, responsibility for many services that are decided at primary care group level will—just as health authorities are struggling with the issue of the

totality of available resources—be transferred to general practitioners. Therefore, the question that the British Medical Association and commentators such as the King's Fund still require the Minister to answer is how they should deal with the problem of expectations exceeding demand when the Government imply that the resources are available.

Mr. Milburn: If the King's Fund cannot read the White Paper or the quality consultation document paper that we have issued in the past few days, I wonder where all its money goes. What we are proposing is perfectly clear: the Government, in conjunction with the clinical professions, will take more responsibility than ever before to ensure greater consistency across the national health service and will, for the first time, do what no Government—Labour or Tory—have ever done, which is to ensure proper national standards across the NHS. I should have thought that the hon. Gentleman would recognise and welcome that.
As I have already said, Viagra has not yet been licensed, and the Government are keeping the issue under review. I conclude by saying four things. First, the Government accept that, for some patients, impotence is a significant clinical condition, for which effective treatment may legitimately be provided on the national health service. Secondly, depending on the decisions in the European licensing process, Viagra may be confirmed as an effective treatment for some patients, but, thirdly, treatment should be prescribed only following a full clinical assessment and as part of an integrated plan of clinical management.
Fourthly, and finally, I am determined, as are the Government as a whole, to ensure that NHS resources are safeguarded for those with real clinical need.

Question put and agreed to.

Adjourned accordingly at Twelve midnight.